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Is Disney becoming too powerful of a monopoly after buying Fox and Star Wars?

Posted by Jason on December 21, 2017 at 12:35 AM

Disney has announced plans to acquire 21st Century Fox in a deal expected to cost $52 billion pending approval by the authorities. The move, if approved, will give Disney ownership of Fox's studios and rights to all its popular TV series and movies. The plan adds to the Disney galactic empire which was imposing even before the planned acquisition. The company has plans to release streaming entertainment service in 2019 which would have made it formidable even without considering the impact of acquiring Fox. The proposed streaming service would be the first one to rival Netflix. The merger is among the largest in the history of the American entertainment industry, and it will make the company too powerful for the following reasons.

Fox TV may wither away slowly

The deal of Disney buying Fox does not include its TV network which airs The Simpsons, X-Files, and New Girls among others shows. When the network was launched in 1986, it was seen as a folly but became one of the primary sources of entertainment in many American homes starting from the mid-90 with the other popular networks being NBC, CBS, and ABC. The network will lose much of its ability to make money, having sold the rights to its shows. This means it may not exist for a long time unless it finds a way to earn revenue. All of its favorite shows will now belong to Disney, and it does not make economic sense for it to continue airing shows it will not earn from.

Hulu will become Disney's property

Hulu has the potential to take on Amazon and Netflix in the streaming business but has not done so due to its complex ownership structure. The company is owned by Fox, Disney, and NBC who own 30% stake each, with Time Warner holding the remaining 10%. With Disney's acquisition of Fox, it will become the majority shareholder with a 60% stake. It is possible to have Disney acquire the stake held by the other shareholders in the future bearing in mind that it has been seeking to find a streaming platform to rival Netflix. Hulu is a ready-made product that will be easy to launch into the international market. The deal is just another addition to the Disney galactic empire.

Rupert Murdoch's dream vanishes

The Fox business is owned by the Murdoch family, and it had the idea of taking Fox News International to the global stage. However, with the sale of the company's a television network asset to Disney, this dream may not be realized. Murdoch and his family have the ability and financial resources to pursue their dream through another channel. The television network business is lucrative, and it is possible that Murdoch and his family will come up with another outfit.

The acquisition may reduce the variety of movies

Disney and Fox produced different types of films. Disney, on the one hand, is interested in the production of blockbusters while Fox provided the films for adult audiences. Unless Disney chooses to allow Fox to continue with this genre of films, then the industry might be limited to blockbusters. Disney, unlike Fox, is not known for producing many movies per year. If this tradition continues, then the entertainment world will suffer from a narrow menu of films per year. Fox is known as a prolific producer of movies per year aimed at different audiences. It is hoped Disney will allow it continue with this trend.

The deal makes media consolidation worse

Consolidations in the media are not good, and the current agreement will make the matter even worse. It is a long time since Hollywood witnessed the disappearance of one of its successful studios. The acquisition of Fox shows the possibility of more mergers which might create a monopoly in the industry. The addition may lead to a situation where audiences do not get a wide variety of entertainment or news.

Pros of the deal

  • Marvel Studios, owned by Disney will be the new home of favorite Fox characters such as Deadpool, X-Men, and Fantastic Four. The contract provides a chance to have X-Men in Marvel movies.
  • All 'Star Wars' films would now be under Disney. Fox owns 'Star Wars: A New Hope' rights, but the proposed acquisition will bring it under Disney umbrella which owns the Star Wars franchise.
  • Fox shows will be available on the streaming service that Disney is planning to release by 2019.

Cons for the merger

  • Disney might dump Fox Marvel characters. Fox has been in the recent past producing R-Rated films instead of the standard PG-13 movies thus providing a wider variety of movies. Disney may choose to ignore this success and focus on its preferred PG-13 film.
  • The merger is a threat to competition as it leaves too much power and control in the industry in few hands. When competition is low, businesses may become complacent and thus affect the quality of products or services availed to the consumers.

While the deal may seem reasonable, it may affect the industry in the long run. The matter of the merger is now in the hands of the regulators who will determine if it will have positive effects on the market or not.

Categories: Gaming and other topics, Movies and entertainment

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