After months of speculation and on-again, off-again talks, it's official: Disney and Fox have agreed to a $52.4 billion-plus deal Thursday that will bring most of the latter's television and film holdings into the portfolio of the former.
It is not hyperbolic to say that this is one of the most significant Hollywood pacts in the history of the media industry. Details are still being released and the Justice Department still has to approve the agreement -- just ask the billionaires at Time Warner and AT&T how that can sometimes work out -- but the outline of this agreement suggests television as you know it could change very quickly.
The basic framework of the deal will bring a number of major television-related entities into the Disney fold. Included in the proposed terms are:
• Fox's key television studios: Fox TV (producers of series like Modern Family and New Girl), Fox 21 (responsible for series such as The Americans and Homeland), and FX Productions (the pipeline through which many FX projects arrive on TV)
• FX Networks and National Geographic Channels: FX, FXX, FXM, National Geographic, Nat Geo Kids, Nat Geo Mundo -- they're all coming to Disney
• Increased Hulu ownership: Disney's stake would bump from roughly one-third to two-thirds, leaving Comcast as the minority owner in one of the industry's biggest streaming platforms
• Talent deals: all those currently under contract with a Fox studio -- Ryan Murphy, for instance -- would theoretically move over to Disney in some form
That's not everything, but it's certainly enough to illustrate the potential shifts around the bend. The relationship between studios and broadcast networks has grown increasingly tight-knit in recent years, with media conglomerates generally producing shows in house instead of selling them to another network. This is done to keep ownership contained to one big company for licensing, syndication and streaming -- instead of having to split any profits with a network that's part of another conglomerate.
Currently, most of Fox's prime-time dramas and comedies are produced by Fox's television studios. Disney, as the operator of its own broadcaster in ABC, has no need for a second network -- and would face regulatory pushback if it tried to operate one -- so it's not part of the deal. That means the Fox broadcast network -- which won't go to Disney -- will operate without a home studio and won't be able to afford the expensive scripted dramas and comedies we're accustomed to seeing on the schedule.
Which is fine with Fox, because rumors are swirling that Fox will restructure around live sports and news (Fox News is still a big thing), orphaning many of the network's current shows that don't have multi-year renewals (The Simpsons and The Orville aren't immediately going anywhere). Disney might have an interest in placing some of those produced by Fox's studio elsewhere. But something like Brooklyn Nine-Nine, which is owned by Comcast-NBC? It's probably done.
The FX suite of channels is likely in an even more precarious situation. FX and head honcho John Landgraf have been given a significant amount of freedom over the last 15 years, and with fantastic prestige TV results. However, Disney generally isn't in the niche audience business; past mega-purchases like Marvel and LucasFilm have been about creating global properties that can scale upward or downward as needed. Disney's tinkering and rebranding of Freeform illustrates that even when the company identifies a specific target market, it can't always figure out how to appeal to that relatively small group.
The real humdinger of how this deal might reshape your TV experience is, unsurprisingly, with streaming. Disney is going big into the streaming arena sometime in 2019, with a promise to offer library titles (which is now massive with Fox's assets) and exclusive originals from all its recognizable properties in the Marvel, LucasFilm, Pixar and Disney Animated Studios universes (a Star Wars and X-Men live-action series are no-brainers, and could be used to help launch its streaming service a la Star Trek: Discovery and CBS All Access). That new streaming platform combined with the increased majority ownership in Hulu will give Disney a significant ammunitions upgrade in the great streaming content arms race against Netflix, HBO, and Amazon. It's not just the X-Men and Deadpool coming to Disney; the rights to big franchises Avatar and Aliens are on their way too, and Disney has no problem milking a success.
Disney is banking on the Marvel and the LucasFilm originals being enough to lure viewers to its own still non-existent platform. Yet, there's a version of this new streaming world where Disney follows the Netflix and HBO model of development that mixes big originals like Stranger Things and Game of Thrones with much smaller (and less expensive) offerings that reach very specific taste profiles. Netflix, for example, is successful because of the breadth of its appeal, not because of one or two hits.
In that world, FX is potentially more valuable. Better Things won't pull in the millions of people who want to check out a new Star Wars TV show, but it might attract 250,000 dedicated fans. Murphy's event series might keep a million people from canceling their subscriptions for eight weeks. FX won't be a channel like before; it'll be a recognizable brand -- or better yet, an identifiable category to select from on the landing page of a streaming platform.
Concentrated ownership of media properties is always going to lead to less competition in the traditional sense. But while the competition is sure to dry up in one arena (on actual television), it's about to get even more insane in another.