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How Fox’s Assets Will Boost Disney’s Portfolio

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More on the Disney-Fox deal

The Walt Disney Company (DIS) has finally received approvals from regulators in Mexico and Brazil (EWZ), which were the last hurdles to its acquiring most of the media and entertainment assets of 21st Century Fox (FOXA). The $71.3 billion deal came after a long wait of more than a year and is scheduled to close on March 20.

The assets Disney won’t buy will be retained by Fox and will become part of a business called New Fox. New Fox will keep the highly lucrative Fox Broadcasting Company, Fox News, Fox TV stations, and Fox Sports networks.

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Fox’s vital assets

The acquisition will add Fox’s hit franchises such as The Simpsons, X-Men, and Fantastic Four to Disney’s Marvel Studios. Disney’s deal will also include the distribution rights to Star Wars: Episode IV – A New Hope. The addition of Fox’s assets will, therefore, help the company amass more content for its streaming services and combat digital rivals such as Netflix (NFLX) and Amazon (AMZN).

The deal will give Disney the opportunity to expand in the booming market of India (INDA) with a stake in media conglomerate Star India. It will also give Disney a higher stake in Hulu, which is jointly owned by Disney, Fox, Comcast’s (CMCSA) NBCUniversal, and AT&T’s (T) WarnerMedia. Disney, Fox, and Comcast hold 30% stakes in Hulu, while AT&T has a 10% stake. Therefore, Disney would gain a 60% share in Hulu upon the deal’s completion. Hulu added 8 million US subscribers in 2018, up 48% year-over-year, bringing its total count to 25 million.

While Disney will help to expand Hulu’s premium content to other international markets, Hulu will complement Disney’s direct-to-consumer streaming line-up. Though Disney has plans to target adults with Hulu’s content, the upcoming Disney+ service will be aimed at kids and families.

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