Fox held talks to sell most of company to Disney

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

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

The Walt Disney Company recently held talks with 21st Century Fox about buying up most of the U.S. media giant headed by Rubert Murdoch.

Disney announced earlier this year it was pulling its film content from Netflix in 2019 and launching a rival Disney-branded worldwide streaming service.

While no price has been quoted, nor has a deal been written thus far, it's now being reported that Fox's stock is up by more than 7% since reports of the talks were revealed via CNBC and The Wall Street Journal. Additionally, the negotiations are described as being of an "on again, off again nature", so they may be "revisited" at some point. CNBC reports that for Fox, the willingness to engage in sale talks with Disney stems from a growing belief among its senior management that scale in media is of immediate importance and there is not a path to gain that scale in entertainment through acquisition. Much of Fox's revenue has come from its cable division, which houses Fox News, FX and other channels. It also wouldn't buy Fox's sports programming properties because combining them with ESPN could present antitrust issues.

Disney will not buy Fox broadcast network as it can not own two broadcast networks. The company is said to believe that a more tightly focused group of properties around news and sports could compete more effectively in the current marketplace.

The discussions reflect a view among Fox executives that the media company could not reach the size needed to compete with Amazon.com Inc, Netflix Inc and other major media players, according to CNBC. 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.

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The deal would involve Fox's movie studio (which includes the film rights to the X-Men, Deadpool, and the Fantastic Four) and TV production business, which would leave Rupert Murdoch's media empire focused primarily on news and sports, according to CNBC's David Faber.

Because of the size of the deal, Disney and Fox would be required to file with the government before they could consummate the agreement.

CNBC could not learn the possible structure of the deal between Fox and Disney, nor could the price that is being discussed be determined.

Fox shares leapt 8.9 percent on the news to $26.62 while Disney rose 2.04 percent to finish at $100.65 on Wall Street.

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