Disney To Acquire Fox Regional Sports Networks, Sky as Part of $52.4 Billion Deal
The goal is a ‘rich diversity’ of engaging entertainment experiences and innovative distribution
Disney has entered into a definitive agreement to acquire a majority of 21st Century Fox assets in a move that will reshape the sports-TV landscape around the globe. Covered in the deal are Fox Sports Regional Networks, Sky’s pan-European operations (prior to the deal, 21st Century Fox is expected to seek to complete its planned acquisition of the 61% of Sky it doesn’t already own), Star India, and Tata Sky. The deal does not include the Big Ten Network, according to Disney’s statement.
The deal, valued at $52.5 billion in stock, also includes Twentieth Century Fox Film and Television studios. Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2, and Big Ten Network into a newly listed company that will be spun off to shareholders.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible, and convenient than ever before,” said Disney Chairman/CEO Robert A. Iger. “We’re honored and grateful that [21st Century Fox Executive Chairman] Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”
According to the Disney statement, the acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.
Under the terms of the agreement, shareholders of 21st Century Fox will receive 0.2745 Disney share for each 21st Century Fox share they hold. The exchange ratio was set based on a 30-day volume-weighted average price of Disney stock. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $52.4 billion and a total transaction value of approximately $66.1 billion.
“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Murdoch. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on and is committed to succeeding with a combined team that is second to none.”
At the request of both 21st Century Fox and the Disney board of directors, Iger has agreed to continue in his position through the end of calendar year 2021.
“When considering this strategic acquisition, it was important to the board that Bob remain as chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate such a massive, complex undertaking,” said Orin C. Smith, lead independent director, Disney board. “We share the belief of our counterparts at 21st Century Fox that extending his tenure is in the best interests of our company and our shareholders and will be critical to Disney’s ability to effectively drive long-term value from this extraordinary acquisition.”
Disney said the acquisition will enable it to accelerate use of innovative technologies, including its BAMTECH platform, to create more ways for its storytellers to entertain and connect directly with audiences while providing more choices for how they consume content.
According to Disney, ESPN-branded DTC offerings, as well as Hulu, will be enhanced and able to create more appealing and engaging experiences, delivering content, entertainment, and sports to consumers around the world wherever and however they want to enjoy it.
Disney’s international reach would greatly expand through the addition of Sky, which serves nearly 23 million households in the UK, Ireland, Germany, Austria, and Italy; Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.
With respect to the Sky acquisition, 21st Century Fox said it remains fully committed to completing the current offer and expects that, subject to the necessary regulatory consents, the transaction will close by June 30. In that case, Disney will assume full ownership of Sky, including assumption of its outstanding debt, at the closing of the 21st Century Fox deal.