Disney Looking to Acquire 21st Century Fox, Deal Would Not Include ESPN

The Walt Disney Co. (DIS) has reportedly held talks with 21st Century Fox (FOXA), that would result in DIS acquiring the FOXA movie studio, TV production studio, several television networks (FX, National Geographic), their international TV services (Sky, Star) and 30% of Hulu. For our purposes, it is what will not be included that is most noteworthy; Fox’s Sports Programming. There is a belief that combining those assets with ESPN could be construed as anti-competitive and lead to anti-trust violations. For those same reasons, DIS will not be purchasing the Fox Broadcast Network, Fox News or Fox Business Channel. Negotiations are currently on hold, though certainly not dead.


Howie Long-Short: 21st Century Fox doesn’t believe it has enough desirable content to compete in the OTT entertainment streaming space, so the company will strip down to just news and sports programming; content that still draws live viewers (and advertisers). As for DIS, adding the 20th Century Fox catalog, as they prepare to launch a new DTC service, must be considered a boon. FOXA shares are up more than 10% since the story broke on Monday (DIS is up nearly 3%). The company will report fiscal Q1 earnings later today. DIS will report fiscal Q4 earnings tomorrow.


Fan Marino: I find Fox’s NFL coverage, from the studio talent to the graphics, to be unwatchable; so, it’s disappointing to hear ESPN won’t be taking over production of Fox’s sports properties. Perhaps in another lifetime we’ll get a Gus Johnson/Bill Walton college basketball broadcast.


Trends Point to a Future of Multi-Purpose Venues, Away from Single Sport Facilities 


There is a trend in stadium/arena development to diversify venues, moving away from single purpose facilities that sit vacant for long periods during the calendar year, towards ones that can host a variety of non-traditional events (i.e. marathons, conferences, video game tournaments etc.) and draw spectators with varied interests. These new facilities are being built in more desirable locations (see: downtown) to encourage more visitors to attend. Flexible venues are also easier to finance with multiple parties contributing; as the public funding that used to subsidize the development of new sports facilities has, for the most part, dried up.


Howie Long-Short: New stadium construction can now cost more than $1 billion, so it makes fiscal to maximize ancillary revenue from stadium event rentals. Still, 86% of economists say that public funding for sporting venues is likely to cost taxpayers more, than any economic benefits realized by the finished facility; and most taxpayers are unlikely to ever step foot in the building. I’m all for multi-purpose venues, so long as the total expenditure for construction is coming out of owner(s) pockets.


Fan Marino: The Washington Redskins have released plans for a new 60,000 seat stadium that would offer locals far more than a place to watch football games. The proposed venue will include a moat that can be used for kayaking and surfing in the summer, and ice skating in the winter; while the stadium’s exterior will double as a climbing or rappelling wall. That doesn’t sound like a modern stadium, it sounds like an urban outdoor enthusiast’s dream.


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