Undoubtedly the biggest entertainment news of the year is confirmation that Disney intends to acquire a controlling stake in 21st Century Fox. It’s a $52 billion agreement between the two cultural juggernauts that could massively transform the media landscape. The deal is far from done, however. In fact, if the plan dissolves, it could end up seriously costing CEO Bob Iger’s company.
THR reports that Disney stands to lose $2.5 billion dollars if the merger with Fox eventually falls apart. The consolidation of film, television and streaming properties is certain to receive intense review from the Justice Department and FCC. Similar organizations around the world might also look into the deal, as well.
“Particularly scrutinized will be industry consolidation of large production studios, regional sports networks being put under the roof of the company that owns ESPN, and Disney’s would-be greater control over Hulu,” explains THR. “Because the transaction also deals with international assets like Fox’s big stake in European pay TV giant Sky and Star India, there will also be competition regulators around the globe taking a look.”
If the deal is eventually blocked, Disney will be forced to pay Fox billions of dollars to make up for the loss, considerably more than AT&T promised Time Warner for a recent, similar deal. The financial losses cut both ways, however — Fox would owe Disney over $1.5 billion if it suddenly has a change of heart during upcoming legal and ethical reviews. It should be noted that the Justice Department recently enjoined AT&T’s merger with a lawsuit, so similar hold-ups are definitely possible for Disney.
Those are dizzying amounts of cash, but it’s a gamble both media giants are willing to take. Both corporations are looking to stay afloat amidst the rise of numerous competing streaming services and companies. If approved, both behemoths stand to gain quite a bit more cash than they’ll lose if the whole thing falls apart.
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