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December, 2017

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On a conference call with investors this morning, Disney CEO Bob Iger announced the pending acquisition of FOX for $66B. Involving two of the largest companies in the entertainment space the monster merger is set to dramatically reshape the industry, reflecting a rapidly evolving environment. 

Deadline reports:

Speaking to investors on an early morning call, Iger said that he expects the deal to bring it $2B in savings by 2021 and that it will close within 18 months after “significant” regulatory scrutiny in the U.S and internationally. Iger also reiterated plans to work with 21st Century Fox’s James Murdoch, saying he will be “integral to help us integrate… We’ll continue to discuss whether there is a role here.”

Much of the coverage is currently focusing on what this means going forward in the TV content and the streaming space, Hulu is expected to get a significant boost in prominence and directly challenge Netflix for OTT dominance.

But the impact on the movie space will be dramatic as well, essentially combining the titles the #2 and #4 largest distributors.

As you can see in the chart above the new company would be substantially larger than anyone else currently distributing films, and would, in fact, be nearly 50% larger than Warner which is currently in the number one spot.

Note that we’re using box office revenue in 2017 as a proxy in this case, and that does fluctuate from year to year. 2017 is also not yet wrapped, and these numbers will move somewhat. That said, this should give you a decent sense of just what a shakeup this is in the film industry; though the deal has been anticipated for some time now.

Variety has an excellent extensive write-up on the whole thing:

But the sale reflects rising uncertainty about the economics of traditional media outlets as digital technology forces massive change in the way people consume their news, movies and TV programs. In a world of tech giants such as Facebook, Amazon, Apple and Google with global reach, conglomerates like 21st Century Fox became small by comparison, despite the strength of its brands and content-producing expertise.

It’s worth pointing out that the numbers in our chart above, very notably, do not include the upcoming Star Wars release which we are forecasting to be the highest earning title this year. It could very well push Disney to the top of the earnings chart this year, making this merger even more dramatic.

(Star Wars forecast posting tomorrow!)

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