Why would Disney want to buy a big chunk of 21st Century Fox? Netflix. (2024)

The media industry collectively gasped on Monday after CNBC reported that Disney has been in acquisition talks to acquire a large chunk of 21st Century Fox.

There's no deal yet, and CNBC reported that specifics like what would be included and how much it would cost haven't been hammered out. But even the prospect of such a deal was enough to send media reporters into a dither and traders rushing to buy up Fox shares, which spiked 6 percent just moments after the new broke.

It would be a huge move. Disney would reportedly buy up Fox's movie studio and some of its TV assets, but not its news and sports offerings or its broadcast channel. That would conceivably give Disney a variety of valuable content including the "X-Men" franchise and "The Simpsons."

That kind of old content is becoming increasingly valuable for entertainment companies as they fight to counter the growing dominance of Netflix and the entry of other major tech companies into the industry. Disney will soon be removing most of its content from Netflix and developing its own direct-to-consumer approach.

Buying up Fox's entertainment assets would provide Disney with even more intellectual property to develop, much as its done with other franchises including "Star Wars" and the Marvel universe.

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The deal, however, would almost inevitably encounter government scrutiny. Disney is already a tremendously powerful media company with a wide variety of assets including ESPN, ABC, and plenty more. Disney would counter that by claiming that companies like Netflix are forcing it to get bigger in order to compete.

Disney's acquisition of Fox assets could also include its stake in Hulu. Disney are Fox currently each own 30 percent of the internet-based platform, meaning Disney could theoretically gain a majority stake in the company. Disney has said it's going to have an online platform, and using Hulu would take out a lot of that leg work.

Media journalists and pundits speculated that Monday's report shows that regardless of whether Disney ends up as the buyer, 21st Century Fox's assets are up for sale. Other media companies could now start looking into a bid.

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