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Disney Acquires 21st Century Fox, Transformation Continues

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Apr. 3 2019, Published 7:05 a.m. ET

Disney’s transformation

Walt Disney (DIS) finally completed the acquisition of 21st Century Fox on March 20. For months, Disney repelled an attempted coup by Comcast (CMCSA), which caused the price to increase. Disney bought 21st Century Fox for $71.3 billion—compared to the original price of $52 billion.

In a memo to employees following the Fox transaction, Disney CEO Bob Iger revealed one of the company’s interesting traits. Disney is never satisfied with the status quo. We’ll have to see if Disney continues to seek out big-ticket buyout deals. Iger made clear that Disney is rapidly transforming in response to evolving consumer trends, according to the memo cited by CNBC.

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Traditional television market

Legacy media companies like Disney are witnessing sweeping changes in their industry. The market is shrinking in the television business. Customers are abandoning traditional linear television programming for video entertainment on the Internet. While the top legacy media companies in the United States shed tens of thousands of television customers each in the fourth quarter ending in December, Netflix (NFLX) made big gains during that period. Netflix ended the quarter with 58.5 million paying subscribers across the US.

Disney is preparing to launch a new video service called “Disney Plus” in the coming months. The new service will compete with Netflix. Comcast and AT&T (T) also are preparing their Netflix competitors. A few years ago, Dish Network (DISH) launched an internet-based television service called “SlingTV” to counter threats from digital video providers like Netflix and Hulu. SlingTV ended 2018 with more than 2.4 million subscribers.

Disney generated $15.3 billion in revenues in the December quarter—flat compared to the same quarter the previous year.

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