Contemporary Strategy Analysis, 10th Edition

Case 21Walt Disney, 21st Century Fox, and the Challenge of New Media*

On July 19th, 2018, Comcast Inc. withdrew from the battle to acquire Rupert Murdoch's 21st Century Fox, leaving the field clear for the Walt Disney Company. Disney's initial bid of $54 bn. (plus the assumption of Fox's debt of $14 bn.) had been accepted by 21st Century Fox on December 14, 2017. However, a higher bid from Comcast had thrown the deal into doubt and was only resolved when Disney raised its bid to $71 bn., making the deal worth $85 bn.

For Disney's CEO, Bob Iger, the acquisition would reinforce Disney's position as America's leading entertainment provider. For 87‐year‐old Rupert Murdoch—Fox's controlling shareholder—it signaled his intention to dissolve the multimedia empire that had been his life's work. For both companies, it was an acknowledgement of the technological changes that were sweeping the media sector, in particular, the potential for video streaming to undermine existing channels for distributing video entertainment: these included cinemas, broadcast TV, cable TV, satellite TV, and DVDs. These changes had been highlighted by the rise of Netflix and the entry of technology giants such as Amazon, Alphabet, Apple, Facebook, and Microsoft into the market for video‐based entertainment.

A major motivation for the deal—according to Disney's CEO, Bob Iger—was to bolster Disney's efforts to adapt to these changes occurring in video entertainment. During 2018–19, Disney intended to rapidly ...