Streaming Dreams Drove Disney’s Interest in Fox Assets
Repositioning its TV business to compete in streaming has become the company’s top priority
Walt Disney Co’s DIS 0.96%▲ market capitalization is almost twice as big as Netflix Inc.’s NFLX -2.12%▲ . It operates the most successful movie studio in Hollywood, one of the most profitable channels on cable television and the biggest theme-park business in the world.
Yet its pursuit of 21st Century Fox Inc.’s FOX 1.58%▲ entertainment assets indicates that repositioning its television business to compete in the streaming, a-la-carte world Netflix dominates has become Disney’s top priority.
Disney’s TV operation alone is substantially larger than Netflix, but its growth has stalled while its digital competitor is booming. Netflix’s revenue increased 32% in the first nine months of its current fiscal year to $8.4 billion and its operating income grew 163% to $593.4 million. In the first nine months of its fiscal year, Disney’s TV revenue was flat at $18 billion and operating income fell 11% to $6 billion.
Recent talks for Disney to acquire Fox’s entertainment cable networks and film and television studio, and stakes in European satellite broadcaster Sky and streaming television company Hulu, have stalled, and it is unclear whether they will restart, let alone result in a deal, according to people close to the discussions. Fox and Wall Street Journal parent News Corp . share common ownership.
In an interview before the Fox talks were reported this week, Disney Chief Strategy Officer Kevin Mayer said Disney has in the past decade spent $15 billion buying up “really high quality” intellectual property from Pixar Animation Studios, Marvel Entertainment and “Star Wars” producer Lucasfilm.