Recently I have seen reports that, after the acquisition, 21st Century Fox will be exiting the non-family friendly content business. As I read these reports, I can’t help but ask, “where is this coming from?” After all, part of the rationale behind the deal is to gain access to talent that produces things that are outside of Disney’s wheelhouse. If Disney was expecting to make more of the same, why would they bother buying something new? If they were only interested in family-friendly movies and shows, would Bob Iger have specifically called out Fox Searchlight, FX, and Deadpool as reasons for this deal to move forward?

Let’s cut to the chase, this deal is about building scale so they can launch and enhance a suite of direct-to-consumer services under three different brands, ESPN, DIsney and Hulu. Let’s take a look at what this deal does for these services:

ESPN

With the announcement that Disney will be selling the regional sports networks as part of the deal to acquire 21st Century Fox, there’s little impact that 21st Century Fox will have on ESPN domestically. Depending on what happens with the Sky deal, there may be some changes internationally, but ESPN will continue offering their direct-to-consumer service with the rights that they have steadily been building over the past few months, particularly focused on soccer and combat sports (MMA, boxing).

Disney

The Disney service will include Disney and Pixar, but also all-ages Marvel and Star Wars. From the Fox acquisition, expect to see National Geographic content living here as well. It is unknown if Fox’s family franchises such as Ice Age and Alvin & The Chipmunks will live here too. The service will offer library content, new original movies, classic Disney TV, new original series, and short-form content. Even without the acquisition, Disney had plenty of content to live here as the kinds of offerings on this service have been Disney’s bread-and-butter over the past decade.

Hulu

First of all, Disney will get a controlling interest in Hulu which will allow it to guide the content plan and investment strategy of the service. This service will have edgier content from ABC, Freeform, 20th Century Fox, FX, and Fox Searchlight. This is where Disney needed to bulk up, as they have not really been in that business since the sale of Miramax and the sunsetting of Touchstone. As Bob said in an investor Q&A:

We’ve not really been in the lower-budget, high-quality motion picture business since the heyday of Miramax really. And we got out of it in part because we weren’t doing it well. We like the movie business though, when done right, and we’re quite impressed with what they’ve done and since we don’t have — we’re not making movies in that space, that’s again, like FX, a blank that we’re filling in that we like. And if
managed efficiently, and we believe we’ll be able to do that — take advantage of the system that we already have — we think it’s a good investment to make in intellectual property that could ultimately feed direct-to-consumer business thereafter.

It is important to note that they are not going “all-in” on the direct-to-consumer business. They will still release things theatrically and through linear TV networks, but those offerings will eventually end up on the direct-to-consumer services. If The Walt Disney Company was only interested in “family friendly” content, there would be nothing to put on Hulu and this whole scheme would be pointless. It is unknown how many movies and shows the larger Disney will be producing and how many would fall under each of their brands. But there are some basic facts:

  • The Walt Disney Company will be making more content than they ever had before.
  • The Walt Disney Company will be creating edgier content under the brands they are acquiring.
  • The Walt Disney Company will be expanding beyond tentpole “big budget” films.

Much is not known about what will happen in the next six to 12 months. Afterall, I doubt Disney wants to publicly unveil their strategy before the deal is consummated. I also presume Disney is having a lot of internal discussions about their future content plans.., But don’t let the internet fool you. Deadpool, Fox Searchlight, and FX are here to stay.

 

FanBoy is a Disney dweeb who has worked at Disneyland and Walt Disney World

 

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