Consolidation strikes again, this time in the entertainment industry. Disney will acquire most of 21st Century Fox in a massive acquisition that will bring much of the Hollywood studio system under one umbrella. The deal will give Disney a massive edge not just in production but also in distribution, and also create leverage along both verticals in regard to competition:
Disney is buying 21st Century Fox, in a $52 billion mega-merger that creates an entertainment power house.
The Walt Disney Co. has set a $52.4 billion, all-stock deal to acquire assets including 20th Century Fox film studio and other entertainment and sports studios and networks from Rupert Murdoch’s empire. The deal between Disney and 21st Century Fox marks a historic union of Hollywood heavyweights and a bid by Disney to bolster its core TV and film businesses against an onslaught of new competitors in the content arena.
The transaction unveiled early Thursday morning has a total value of $66.1 billion, with Disney assuming $13.7 billion in 21st Century Fox debt. Disney chairman-CEO Bob Iger has extended his contract with the company through the end of 2021 as a result of the acquisition.
Good Morning America presented a glowing picture of the acquisition, which isn’t exactly a surprise since ABC is part of the Disney universe:
BREAKING: Walt Disney Company to acquire 21st Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and int’l TV businesses, for approx. $52.4 billion in stock. pic.twitter.com/IgvuUSVR1P
— Good Morning America (@GMA) December 14, 2017
The only assets not going to Disney are those which would have triggered an anti-trust action from any administration. The Murdochs will keep the Fox broadcast network, Fox News, and Fox’s sports cable platforms, all of which will compete with other Disney units, as well as its owned-and-operated TV stations. Its purchase of Sky in the UK will continue, but the British platform will transfer to Disney as part of the sale. That will probably clinch the Sky deal, as British regulators had issues with having the cable network fall under the Murdochs’ control.
It’s not likely that the Trump administration will take issue with this deal on anti-trust grounds, but it probably should. This acquisition will consolidate a significant amount of the entertainment industry under one roof, reducing competition at all levels. The ability to independently produce and then distribute content will be even more limited with the ownership of so many distribution channels under one roof.
The consolidation of that much economic power into one organization will translate into political power, which will then be deployed for rent-seeking legislative and regulatory actions at the local, state, and federal levels. Don’t expect that rent-seeking to result in smaller, more accountable government; in fact, we can expect just the opposite. Plus, that kind of power will make the industry even less accountable than it already is in an era when the lack of accountability in the entertainment industry is producing real-life horror stories.
If conservatives care about smaller government, we will eventually have to recognize the threat to it that Big Business represents. Mega-acquisitions like Disney’s and AT&T’s put far too much control over communications and industry into too few hands. We want a free market, but when consolidation reduces a market to one or two entrants, consumers no longer get free choice and dynamic innovation. We will have gone from three broadcast networks to 500 channels, only to find that three CEOs control what’s on the 500 channels and only a couple of executives run the delivery services to access them. How much of a free market is that?