Comcast Bows Out of Competition for Fox, CEO Congratulates Disney as Bidding War Ends

[Falhófnir]

I appreciate the reply. However, say you or I buy the Fox library instead. Once purchased, we OWN it. If we own it, does it have to keep operating exactly as it does or can we decide- say- we're going to take what is not already obligated and do whatever we want with it? Fox (and Warner) have 80+ years of accumulated content in their massive libraries.

Yes, there are certainly some current deals in place and yes, it's probably good business- maybe even a condition of the deal- that they honor contracts already in place. However, such contracts are rarely perpetual. So eventually, you or I as purchaser would regain full say in whatever we want to do with our content. And in the meantime, we'd have a TON of stuff not leased out to anyone that would could blend into whatever we're hoping to roll out soon to underpin a little bundle of original programming that we hope will be hits desirable enough to make OUR streaming service fly.

Now sub in Apple for us. 80+ years of content not already obligated in some contracts we want/have to honor could be an enormous base of (up to) exclusive content to underpin a little bit of brand new original content we're making ourselves. Look at a Netflix. Netflix has not always had a bundle of original content. It basically got its start on cheap deals for access to various studio's libraries of content. This would be almost the same except Apple as buyer could OWN this particular content instead of short-term lease access to it.

Oh, and sales & rentals of such content in the iTunes store would flip from 30% right off the top to upwards of 100% for Apple.

What is Disney going to do with this? Business as usual at Fox? Or take control of it's new property and do whatever Disney wants with it? Apple could have been a player here. Yes, cash in the vault might have fallen too far below the Exec diving board for a comfortable swim for a few quarters... but diving boards are pretty easy to movie... and it's only a few quarters to refill that particular pool.

And again: a deal Apple could have worked might involve buying this instead and then selling or leasing a few choice properties to Disney to reduce the total cost of the deal. Then, Apple gets the bulk of a huge library of well regarded content, Disney helps pay for it by getting a few particular pieces of that library that Disney probably wants very much and Apple can roll out an Apple branded streaming service with a ton of original + classic content instead of trying to make a smallish bundle of original content try to carry the day. Nobody else is trying to roll out their own streaming service solely or heavily on the strength of only original content. Instead, they are bundling original with a good amount of established and/or classic content. Apple may break that mold here but they didn't even have to try to break it if they opted to use some of the cash hoard to be able to roll out a much deeper service... AND bring on a bunch of established expertise and talent to better help make this new strategic thrust go.

So you want Apple to take decades of much beloved Fox content and make it exclusive to Apple TV and iTunes users? I think Apple would end up with a lot of extremely angry people...

 

[HobeSoundDarryl]

No, apparently WE want Disney to have such an option.

Disney already withholds 4K versions from Apple's service. Let's hope they'll opt to do the same with Fox content too.

Because clearly, that's better.

Sarcasm aside...
Apple WANTS to get in this streaming content business. Nobody has succeeded with that solely on a little bundle of original programming. Apple has much too much cash doing next to nothing. One option could be to shore up this strategic thrust by buying a ton of original content already in the can. There's a LOT of great video in both of those libraries. That's why the likes of AT&T, Comcast, Disney, etc are opting to spend many billions to buy it.

While THIS may seem like a natural for Disney, it's not as obvious of a fit for a Comcast or AT&T. And yet, there they are, making big runs at it too. Comcast makes some sense since they acquired NBC-Universal. AT&T seems farther from this space but they'll likely become the owner of the Warner library when the last bits of dust settles. Where's Apple?

 

[Falhófnir]

No, apparently WE want Disney to have such an option.

Disney already withholds 4K versions from Apple's service. Let's hope they'll opt to do the same with Fox content too.

Because clearly, that's better.

Sarcasm aside...
Apple WANTS to get in this streaming content business. Nobody has succeeded with that solely on a little bundle of original programming. Apple has much too much cash doing next to nothing. One option could be to shore up this strategic thrust by buying a ton of original content already in the can. There's a LOT of great video in both of those libraries. That's why the likes of AT&T, Comcast, Disney, etc are opting to spend many billions to buy it.

While THIS may seem like a natural for Disney, it's not as obvious of a fit for a Comcast or AT&T. And yet, there they are, making big runs at it too. Comcast makes some sense since they acquired NBC-Universal. AT&T seems farther from this space but they'll likely become the owner of the Warner library when the last bits of dust settles. Where's Apple?

... the difference here is quite clearly that Disney makes money by selling and distributing this content as widely and in as many formats and on as many services as possible. Apple by contrast makes money by getting you to sign up to their service, and the content is just a hook to draw you in. Again, taking this content and saying ‘you can now only access it if you sign up to us’ will make a lot of people very unhappy with Apple and probably have the inverse of the desired effect.

 

[HobeSoundDarryl]

Believe what you wish. Disney will soon be able to make a lot of us Apple people unhappy if it likes... by- say- excluding/constraining/limiting it's content plus this Fox content from Apple's service. Disney wouldn't dare... or Disney is Apple's friend? Again, watch any Disney content in 4K now on TV.

Like Hulu? Disney would go from part owner to DOMINANT owner of Hulu (60% with the combined stake). Is that good for us consumers?

Disney wouldn't dare make people angry by pulling content from a popular service, right? https://www.cnbc.com/2017/08/08/dis...lix-and-start-its-own-streaming-services.html

Netflix is a popular streaming service (IMO the MOST popular of this ilk). If Disney is willing to terminate access for Netflix subscribers to shore up it's own streaming service offering, do we believe they would take a different tact with Apple's offering?

I'm not really saying Apple should have absolutely purchased Fox here. What I am saying is it seems like they should have been a player if they are very serious about a streaming video service. While $71B is not even "chump change" for Apple, they are one of the few players that could have done it. Had they done it, whatever rolls out as a streaming service from them would have a lot more to offer than a handful of original programs they'll apparently have to hope will be huge hits.

 

[TaviDuprix]

... the difference here is quite clearly that Disney makes money by selling and distributing this content as widely and in as many formats and on as many services as possible. Apple by contrast makes money by getting you to sign up to their service, and the content is just a hook to draw you in. Again, taking this content and saying ‘you can now only access it if you sign up to us’ will make a lot of people very unhappy with Apple and probably have the inverse of the desired effect.

This would not be how it would work. Apple would not make them exclusive. They would just ask for enough money from various other sources that the cost would be more to watch it on any other platform than Apple.

 

[arkmannj]

I see that my bid for all the money I have in my pockets was ignored by Fox... well fine then... congrats Disney.

All joking aside, I'm not a big fan of all the big mergers, but in this case I'd much rather Disney own it than Comcast.

 

[anson42]

Am I the only person who is wondering what Disney will do with Fox News? I know what I'd do with it but I'm not the acquirer...

EDIT: Oh, looks like it is going to be spun off with some other Fox assets and run independently.

 

[TaviDuprix]

Am I the only person who is wondering what Disney will do with Fox News? I know what I'd do with it but I'm not the acquirer...

EDIT: Oh, looks like it is going to be spun off with some other Fox assets and run independently.

What is much more hard to understand is how this all works with Sky. The article I read reads as if Disney now owns the 39% stake Fox had yet they still reference Murdoch and their pursuit along with Comcast. It even goes on to say the cost of Disney's deal may increase as a result. Do I gather that the Murdochs are going for the other 61% of the stake with this new found cash and if they do they will assume the 31% of the stake at a discount to Disney for the other assets but if the Murdochs lose out to Disney they will pay more to them for the new fair value of that share and then if Comcast wins a whole other sequence of events occurs???

 

[anson42]

What is much more hard to understand is how this all works with Sky.

My head hurts