Disney shareholders voted to buy these Fox assets. Now what?

A previous title of this article incorrectly stated that Walt Disney Co's board of directors had approved an acquisition of the assets of 21st Century Fox Inc. Instead, the shareholders voted and approved the company. Friday purchase. The error has been corrected.

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The shareholders of Walt Disney Co. and 21st Century Fox on Friday approved a $ 71.3 billion deal that will place some of Fox's most coveted entertainment assets in the arsenal of already formidable content of the Mouse House.

Approval came after months of uncertainty, with Comcast Corp.

CMCSA, + 0.95%

made an unsolicited cash purchase offer of $ 65 million in June, forcing Disney

DIS, -0.78%

to increase its initial offering from $ 52.4 billion to $ 71 billion in cash and shares. Last week, Comcast abandoned its pursuit of assets, stating that it would now focus on its offer for the European pay-TV company Sky PLC

SKY, -0.13%

leaving Disney in the clearing. With this agreement, Disney will acquire Twentieth Century Fox television and movie studios, cable networks such as FX and National Geographic Channel, Star India, a significant stake in Sky PLC and majority control of the Hulu streaming service.

But now that the big vote is out, Disney still has to deal with several important articles.

Fox

FOXA, -0.51%

currently owns 39% of Sky and has been engaged in a bidding war with Comcast for the remaining 61%. The latest offer came earlier this month when Comcast made a $ 34 billion Sky enhancement offer, up 5% from Fox 's most recent offer.

Disney will get Fox's participation in the European pay-TV giant in the acquisition contract, and companies will have to decide whether to pursue the acquisition of the rest of Sky, or let Comcast win that- this.

Fox's current offer for Sky would add $ 19.5 billion to Disney's acquisition costs, said Rich Greenfield, a BTIG analyst, in a note published this month. Disney said that each £ 1 increase in Sky's offer would add $ 1.5 billion in additional debt and $ 60 million in annual interest charges.

But the cost of what Disney CEO Robert Iger calls a "real jewel in the crown" should not be a deterrent, according to some analysts.

"While it's certainly possible that Fox (and in turn, Disney) will move away from Sky and not match / exceed the Comcast offer, it's hard to believe ", wrote Greenfield. "Why give up, while the overall cost differential is actually 1.1% for Disney?"

At the same time, some investors may prefer that Disney move away from Sky

"It's a lot on their plate" Daniel Ives of GBH Insights. "From an investor's point of view, 21st Century Fox's integration is at the forefront and it's already a lot of work."

Part of this integration includes Hulu, including 21st Century Fox, Walt Disney and Comcast each own 30%. AT & T

T, + 2.41%

holds the remaining 10% through the recent acquisition of WarnerMedia, formerly Time Warner.

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The Fox case is over, Disney will own 60% of the streaming service, giving it majority control. The question will be how does Disney integrate this new asset with its own native streaming service that should be launched in 2019, said Ives.

It is also possible that Disney will end up trying to acquire Comcast's Hulu share, even though Ives said it's likely that Disney will focus on the shorter-to-shorter goal term to integrate its new assets.

"Now, that's when the work begins," he says.

"The successful integration of these assets, building an ecosystem of content and streaming capable of competing with Netflix and Amazon in the coming years is the key to this acquisition," he said. said, adding: "It's about what the shareholders are focused on."

Fox's shares have soared 31.2% so far this year, while Disney's shares have risen from 5.2%. The S & P 500

SPX, -0.66%

gained 5.9% and the Dow Jones Industrial Average

DJIA, -0.30%

gained 3.4%.