What The Disney-Fox Deal Really Means For Hollywood

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.

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.

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

Why the Disney-Fox Deal Could Be Bad For Hollywood

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."

Sally Hawkins and Doug Jones in The Shape of Water

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.”

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.

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

How the Disney-Fox Deal Could Be Good For Hollywood

“Good” may be too strong a word for such a deal. It does seem preferable to the merger with Comcast, given that Disney have never gotten into the business of providing internet access, and a Comcast acquisition could further weaken the fight against net neutrality. From a purely business point-of-view, Disney are at the top of their game and their expanding roster of franchises - from Marvel to Star Wars, as well as Disney's own stable of properties - break box office records time after time. If you’re a fan of these films, there’s an immense comfort in knowing that you’ll get new installments regularly and they’re all guaranteed to be at the very least pretty good. There is something to be said about a major studio that puts immense care and talent into its big-budget blockbusters, given that such things are not always guaranteed.

While fewer movies means less choice for the consumer, it could also mean safer bets for the studio. If the Summer season continues to become ever more crowded with competition, it would be easier for a studio like Disney to space out its offerings in a way that would make the game fairer, if only for themselves. At the very least, it could stop these films from cannibalizing one another’s audiences. Solo: A Star Wars Story, for instance, may have been able to survive Avengers: Infinity War, but it couldn’t withstand the force of that film combined with Deadpool 2 in such a short amount of time.

It would be near impossible for the other major studios to try and beat Disney at their own game once they have such a mighty share of the market. Studios like Warner Bros. and Universal have their own big-budget franchises that do well at the international box office, but they can't keep up with the combined weight of Disney plus Fox. The smarter move for these other studios would be to renew focus on the smaller budgets and mid-tier projects that have proven so popular in the past several years. Indie start-ups Blumhouse and A24 have become big players in Hollywood by taking risks, and Paramount has reaped the benefits of low-budget films like Book Club and A Quiet Place. They may not offer the billion-dollar paydays of a Marvel film, but with blockbuster film-making budgets becoming bloated, there's much to gain from downsizing. This could open up opportunities for new and fresh film-making voices. Why worry about the sixteenth installment in a franchise with a 9-figure budget when you can foster the next Jordan Peele or Greta Gerwig?

It must also be mentioned that, for many film fans, the prospect of all those movie crossovers is enough reason to get excited about a Disney-Fox acquisition. The average viewer probably isn’t all that invested in the Wall Street goings-on behind corporate takeovers, and the idea of finally getting to see the Avengers hang out with The Fantastic Four or an X-Men movie in Marvel continuity is all that matters. There’s nothing necessarily wrong with this, and it’s to be expected given how much of Marvel’s brand is rooted in their intricate world planning and universe crossovers. The Marvel Cinematic Universe is already one of modern film’s most ambitious projects, and the Fox acquisition can only make it more so.

The proposed deal won’t go through for at least a year, so much can change in the interim period. It is unlikely that Comcast will up their bid or become the more viable option for the acquisition, but with so much at the Department of Justice in flux, it would not be a surprise to see further objections to this merger. For audiences, the prospect of a Disney-Fox merger could be tantalizing, but there’s much going on beneath the surface that demands further interrogation.