This article titled “Rupert Murdoch Reshapes Media Empire with $66bn Disney deal” was written by Mark Sweney, for theguardian.com on Thursday 14th December 2017 18.10 Asia/Kolkata
Rupert Murdoch has agreed to sell $66bn (£49bn) worth of 21st Century Fox’s assets, including a Hollywood film studio and 39% stake in Sky, in a deal that transforms his media empire.
The takeover involves the 86-year-old tycoon and his family taking a 4.25% stake in Disney, gaining control of assets including Avatar, X-Men, The Simpsons and Modern Family as well as the FX and National Geographic businesses.
Murdoch will retain control of Fox assets including the profitable, and controversial, Fox News channel.
“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Murdoch, executive chairman of 21st Century Fox.
Disney chief executive Bob Iger has signed a contract extension to continue to run the business until 2021. James Murdoch, the chief executive of 21st Century Fox, has not been named in the new corporate structure and is expected to leave to pursue other business interests when the deal completes.
“We’re honoured and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building,” said Iger.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before.”
The transaction also marks a pivotal moment for the Murdoch dynasty with the departure from the business of James, who is also chairman of Sky. The move paves the way for his elder brother, 46-year-old Lachlan to inherit executive control of the Murdoch empire. Lachlan is co-chairman of 21st Century Fox and News Corp, the separately listed business that owns the Murdoch newspaper assets including The Times, The Sun and the New York Post.
The deal will not, for now, impact the proposed takeover by 21st Century Fox of the 61% of Sky it does not own. The Competition and Markets Authority will continue to investigate the deal as a Murdoch-brokered takeover, pending Fox’s Sky stake officially changing hands.
“While 21st Century Fox’s existing plans to acquire Sky remain in place, we expect the current investigation to continue,” said a spokesman for the department of digital, culture, media and sport.
Disney and Fox said that they expect the £11.7bn deal to buy the remaining 61% in Sky will be cleared and completed by June next year.
21st Century Fox said that it intends to spin-off the remaining assets as a separate business, called New Fox, that will include Fox Broadcasting network and stations, Fox News, Fox Business, Fox sports and its regional network of stations in the US.
Under the terms of the deal, which will cement Disney’s place as the world’s most-powerful entertainment brand, Disney is paying $52.4bn in stock, including $13.7bn in debt – the total value of the deal is $66bn. Fox shareholders will own about 25% of Disney, with The Murdoch’s 17% stake in 21st Century Fox translating to just over 4%.
Disney has said that the deal, which will allow it to bring together X-Men, Fantastic Four and Deadpool with the Marvel universe including Iron Man, Avengers and Captain America it already owns, will generate $2bn in savings.
“When considering this strategic acquisition, it was important to the board that Bob remain as chairman and chief executive through 2021 to provide the vision and proven leadership required to successfully complete and integrate such a massive, complex undertaking,” said Orin Smith, lead independent director of the Disney board.
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