What The Disney-Fox Deal Really Means For Hollywood

Disney Fox deal

The impending Disney acquisition of 21st Century Fox has been much debated, but what does it really mean for Hollywood & the film industry?

The Walt Disney Company’s planned buyout of Fox and its major assets has been a long time in the making. Though the deal was only officially announced last December, gossip had swirled about the potential buyout for months, with billions of dollars on the line. Progress moved back and forward, with Comcast entering the picture as competition for the deal. Both upped their offers to dramatically high numbers, but most experts put their bet behind Disney reigning supreme.

Related: Fox Shareholder Files Lawsuit To Prevent Disney Acquisition

It seems like that day may come sooner than expected, as Disney's $71 billion bid won the endorsement of influential proxy advisers such as Institutional Shareholder Services Inc. and Glass Lewis & Co. What that means is that Disney have third party experts on their side advising Fox that this deal would be more beneficial than one with Comcast, even if they were to offer more money. Disney also have the Department of Justice on their hands, as the Antitrust chief Makan Delrahim called the deal "a victory for American consumers." This comes despite Delrahim's continued efforts to block the merger of AT&T with Time Warner, a deal that many have compared to the Disney-Fox one, which was approved with questionable speed. The DOJ announced that they would approve of the deal as long as the company agreed to divest Fox's 22 regional sports networks. Now, Disney are reportedly aiming for the deal to be finalized by summer 2019, although a Fox shareholder has filed lawsuit to stop the deal going forward.

Why the Disney-Fox Deal Could Be Bad For Hollywood

Disney Castle Logo

One doesn’t have to look far for criticism of this planned merger (we covered it in detail several months ago). This deal could give Disney control of around 40% of the domestic box office, a number that would eclipse nearby competitors like Warner Bros. and Paramount. Not only would that give Disney immeasurable control of the movie calendar, it would increase their stranglehold on theaters. As noted by many critics and theater owners, the strict conditions imposed by Disney make it tough to do business. For the release of Star Wars: The Last Jedi, Disney demanded a huge 65% cut of domestic ticket sales rather than the average 55 - 60% cut. They also demanded a four week hold in each venue, usually on the biggest available screen.

Those who did not comply would face a 5% penalty and risk the film being completely pulled from their theater. If you're an independent theater with two or three screens in a town of a few thousand people, this makes it very tough to so business and gives you nothing to negotiate with. Some theaters opted out of screening The Last Jedi for that very reason, and cinemas abroad followed suit, including many Brazilian theaters who boycotted Pixar's Coco. If Disney owned an even bigger chunk of the market, they could impose even tougher demands.

Another great worry is that Disney will simply buy out Fox, gut it and its various subsidiaries of their assets, then leave the foundational structures to rot. This wouldn’t be new in Hollywood or for Disney themselves. When The Shape of Water won top prize at this year’s Critics Choice Awards, producer J. Miles Dale urged Disney CEO Bob Iger "not to mess" with Fox Searchlight, the lauded indie movie division of the company, which produced Shape of Water and other critically-acclaimed low-to-mid-budget films. To much applause from the audience, Dale said, "I don't know if Bob Iger's out there or not, I don't know what's gonna happen with this Disney thing, but I urge you not to mess this up. They've got a good thing going and they rock."

Logan director James Mangold, who has also made films under the Searchlight banner, expressed further concern that the acquisition will result in less films. If Disney owned 30-40% of the market, why risk drowning out their big projects with their own competition? Mangold noted:

“If they’re actually changing their mandate, if what they’re supposed to do alters, that would be sad to me because it just means less movies. I just hope what we end up with is going to be a positive in terms of movies ... The real thing that happens when you make a movie rated R, behind the scenes, is that the studio has to adjust to the reality that there will be no Happy Meals.”

RELATED: Fox Delays Shareholder Meeting On Disney Acquisition Until After Comic-Con

Disney’s brand is rooted in the family friendly, and while it’s admirable that they’ve managed to be so successful under their own name without ever straying past a PG-13 rating, it would be highly limiting for them to hit the stop button on all such movies under the acquisition. While Bob Iger has said the studio is reconsidering its stance on R-rated films, it’s not hard to see why film-makers like James Mangold would worry.

Star Wars Bob Iger George Lucas

The company also have a bad history in their relationship with the media. It is ironic that critics are often accused of being in the pockets of Marvel Studios in order to keep DC and Warner Bros. swimming in bad reviews, because critics are far more likely to face problems with the people who own Marvel. When Disney tried to ban the Los Angeles Times from attending press screenings after the newspaper extensively covered the company's political influence in Anaheim, many writers and publications protested. Eventually, Disney relented, but it did little to ease industry-wide fears of how a massively influential company whose power continues to grow would treat journalists covering their business. What's to stop a company with 40% of the market share engaging in further acts of supposed retribution against those whose opinions or reporting they dislike?

There are many other concerns that could be addressed: The general problems of a media monopoly; worries over how such a mighty conglomerate could take on and weaken unions and workers’ rights; worries over the power this would give Disney as a streaming provider, given that controlling shares in Hulu are part of the deal; the fear of weakened creative freedom for writers and directors; and so on. This is not the sort of deal that goes through every day.

Page 2: How the Disney-Fox Deal Could Be Good For Hollywood

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