Why Did Disney Only Acquire 20th Century Fox's Assets and Not Its Entire Company?

The decision by Disney to acquire only the assets of 20th Century Fox, rather than the entire company, was influenced by a multitude of factors, including regulatory constraints, corporate interests, and strategic business moves. This article will delve into the reasons behind this decision.

Regulatory Barriers: FCC Regulations

One of the primary reasons Disney could not buy the entire 20th Century Fox was due to FCC (Federal Communications Commission) regulations. Disney already owned ABC, which already had its shares distributed among the different networks. Therefore, acquiring the Fox TV network would have violated these regulations.

Control and Independence

The Murdochs, bypassing other factors, were keen to retain control over Fox News, Fox Business, and Fox Sports. These properties have long-standing loyalty with their audiences and are not interchangeable with Disney's existing content. Disney was not particularly interested in these channels, especially Fox News, which has a reputation for conservative news coverage.

Spinning Off Assets: Creation of Fox Corporation

As a solution to these constraints, certain assets were spun off as Fox Corporation, including Fox Broadcasting Company, Fox Television Stations, Fox Sports, and the Fox Studio Lot. The Disney executives leased the lot temporarily but plans were in place to eventually convert it into condominiums or similar uses.

Antitrust Compliance and Partnership Adherence

Disney’s acquisition of the various assets was meticulously planned to comply with antitrust regulations and to keep good relations with regulatory bodies.

The acquisition was structured in a way to remain within the Department of Commerce’s Antitrust Division and the FCC, ensuring that no single entity would dominate the media landscape. The key exceptions were the publishing division of News Corporation and Fox Radio, which Disney was not interested in acquiring, and which the Murdochs wished to retain.

Specific Assets Acquired and Not Acquired

Disney managed to buy most of the significant assets formerly under News Corporation.

Disney acquired the publishing division, but not the Fox Broadcasting Company and Fox Radio. Disney acquired the ABC Stations Group, which was at the FCC maximum, except for UHF or low-power stations. Disney also acquired the Fox Networks such as ESPN and Regional Sports. Notably, Disney bought Fox Regional Sports, but sold it to an entity called Diamond Sports, a joint venture between Sinclair Broadcasting and Byron Allen Studios. The Diamond Sports deal was later sold to Bally Gaming and now faces uncertainty due to recent bankruptcy proceedings.

Strategic Business Decisions

Disney’s strategic decision to acquire only the assets it needed was based on its market positioning and content strategy.

Disney already owns a range of liberal news companies, such as ABC, ESPN, The History Channel, and National Geographic. This diversity in news and entertainment content meant that Disney had no immediate need to acquire an additional conservative news channel.

Conclusion

Overall, the deal struck between Disney and News Corporation was a careful balance between regulatory compliance, corporate interests, and strategic business moves. Disney opted to purchase the entertainment assets of 20th Century Fox, leaving the Fox News and other traditional conservative news divisions under Fox Corporation.

This approach ensured that Disney could maintain its position in the market while respecting FCC regulations and keeping a wary eye on the evolving media landscape.