Why We Should Be Concerned About Disney’s Acquisition of 21st Century Fox
In a deal announced by on their website last month, the Walt Disney company recently acquired 21st Century Fox along with the accompanying film studios and international cable TV businesses for approximately $52 billion in stock. This acquisition will “allow Disney to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose,” as advertised on Disney’s website. However, this announcement has welcomed critiques over the merger’s potentially negative effects on consumers and competition in the media marketplace.
Those involved in the deal argue that it would not shrink the competitive landscape in media, but instead enhance it by building a potential rival to online streaming services such as Netflix. Additionally, Disney hopes that the expansion will allow them to cater to the consumers’ demands for more diverse experiences by creating a greater expanse of globally shared content that will be delivered in new and exciting ways.
On the other hand, however, the acquisition reduces the number of major Hollywood studios from six to five, and poses a threat to consumers as well as smaller, less experienced competitors. Research analyst Richard Greenfield fears that the deal would enable Disney, whose financial success in the box office already exceeds their competition, to “gain unprecedented market power” by increasing their muscle in the box office with the acquisition of Marvel franchises such as “X-Men,” “Deadpool,” and “Avatar.” Without a doubt, this merger between two enormous media companies prevents smaller companies from entering the marketplace, as they are simply unable to capture a competitive audience size.
David Cicilline, who is the Democratic Representative on the House Antitrust Subcommittee, expressed fear that “Disney’s proposed purchase of 21st Century Fox threatens to put control of TV, movie and news content into the hands of a single media giant.” His opposition to this deal mirrors that of many consumers who that feel that the merger will allow Disney to place restrictions on what cable consumers can watch while simultaneously increasing their cable bills. Through this acquisition, Disney will gain over 300 channels (22 of which are regional sports networks) in addition to control over Hulu and a large portion of Roku.
The scrutiny over this merger follows the lawsuit launched by antitrust lawyers against AT&T’s acquisition of Time Warner; that goes to trial beginning on March 15th of this year. The AT&T-Time Warner controversy is similar to the current Disney-Fox affair because it considers whether or not the consolidation of two major media companies leads to unwelcomed price augmentations on cable customers and limits rivalry within the marketplace. Of course, these are not the first challenges to the current media landscape: in 2011, the first major media merger took place between Comcast and NBC. This acquisition was highly scrutinized but ultimately approved by the Obama administration under the conditions that Comcast agreed to distribute certain television programming over the Internet if one of its rivals did so first. Obama faced contention over this decision after having formerly promised to promote media diversity and to prevent concentration in the media early on in his presidency. Since the controversial approval, Democrats have called for more strict antitrust enforcement in attempts to sway the support of the middle class.
Although he is a Republican, Donald Trump too has previously declared himself to be an opponent to big-time mergers, condemning the proposed merger of AT&T and Time Warner as a deal that would yield “too much concentration of power.” However, it’s important to note that Time Warner is the parent company to CNN, which has frequently portrayed Trump in an unfavorable light and been the subject of his disdain for “fake news.” He has recently changed his tune and expressed support for Disney’s acquisition of Fox. It’s not unlikely that this change of heart has to do with the friendship between Trump and 21st Century Fox Executive Chairman Rupert Murdoch and the positive news coverage that Fox has given the President in recent years. From published images of the duo’s time spent together at Trump International Golf Links and of Murdoch present at the Kushner-Trump wedding in 2009, it’s clear that the relationship between Murdoch and the President provides both sides with benefits that for the Fox executive currently include the swift approval of this deal. It has since been confirmed that Trump called Murdoch to congratulate him on the acquisition shortly after its announcement as he thought it could be a promising gateway for opening jobs.
The deal calls Trump’s motivations into question, as it’s unclear whether or not his own self-interest is driving his approval of this deal. One writer for Variety magazine disputes the claim that the merger will diversify competition in the media, writing that it will instead “reshape the landscape of Hollywood, making it increasingly difficult for producers and directors to find a home for movies that don’t fit into a comic book box or fantasy mold.” With the recent repeal of net neutrality in mind, should we be concerned that the private interests of politicians are curtailing our rights to media consumption? It is certainly something to keep in mind as this deal moves forward and passes.