Disney negotiating to buy 21st Century Fox studio, FX, Nat Geo

21st Century Fox Has Held Merger Talks With Disney—Report

For Disney, the opportunity to "take control of another movie studio and significant TV production assets" as it readies an OTT service is "attractive as is Fox' significant exposure to worldwide markets". The pre-merger clearance process would very likely take a number of months, and the final deal might look very different from what the studios agreed to at the beginning, especially if Disney is required to sell Fox assets to get government approval. But Disney would also "add entertainment networks" such as FX and NatGeo (CNBC.com, 11/6).

As CNBC noted, Fox believes a "more tightly focused group of properties around news and sports could compete more effectively in the current marketplace". The deal also would not include Fox's local broadcasting affiliates, CNBC reported. "Our analysis assumes Disney would have to pay FOX close to $37B for the assets", Jefferies analyst John Janedis wrote Tuesday.

One Wall Street said any potential asset sale will not come cheap.

According to CNBC, the talks have taken place over the last few weeks but there is no guarantee a deal will be finalized and the two sides are not in talks at the moment. The fact that the Murdoch family empire, or at least parts of it, are for sale is a "big change".

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The biggest aspect here is the purchase of the film studio. (Disney acquired ABC in 1996.) It would also exclude Fox's sports channels to avoid regulatory concerns that combining them with ESPN would be anticompetitive.

The two sides are not now talking, but had held talks in the last few weeks, CNBC reported, citing unidentified people familiar with the matter. "For those that have the National Football League now, it is the most important piece of programming, so the risk would be the next set of negotiations should drive up prices, and if you're smaller, it's going to cost you a lot more on earnings than it would if you were bigger" ("Squawk Box", CNBC, 11/7). Fox shares have been "swooning for much of the year". The new service would be the exclusive home of Disney and Pixar films, and acquiring Fox would give it control over more content, while keeping it away from competing services, most notably Netflix.

Fox was not immediately available for comment.

CNBC could not learn the possible structure of the deal between Fox and Disney, nor could the price that is being discussed be determined. So, while there's no deal yet, we wouldn't be surprised if "The Simpsons" is proven right once again.

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