Brief - The Hustle

Monster merger: Disney to acquire Fox

Written by Wes Schlagenhauf | Sep 22, 2020 5:02:01 AM

Superheros. Jedis. Inanimate objects talking — these are everyone’s favorite things. And now Disney owns all of them.

Yesterday, the media juggernaut announced their plan to buy 21st Century Fox for over $66B, the second-largest merger this year.

The deal will include Fox’s movie studios, networks Nat Geo and FX, and a 60% stake in Hulu, among other things.

And they’re waging war on Netflix

In Disney’s all-out media domination, if (and when) this deal goes through, they can finally check “streaming market” off their bucket list.

This merger will allow Disney to sell a trifecta of streaming services: a sports streaming platform, Hulu, and in 2019, their own mega movie and TV subscription service.

But, history says this deal may not be such a slam-dunk

While shareholders are obviously happy, history has shown time and time again that mega-mergers usually destroy a company’s value over time.

According to a report from Accenture, market returns on acquisitions valued over $25B tend to perform worse (usually between 7% and 12%) than smaller ones.

That said… you try telling Disney they shouldn’t do something.