The entire European TV landscape is set to shift dramatically as Disney and 21st Century Fox agreed a $52.4 billion deal for Fox’s studio assets, the FX and National Geographic networks, Fox’s 30% of Hulu and, crucially, a 39% stake in operators Sky and control of Star India.
Sky’s trajectory in TV and broadband will soon see it overtake Liberty Global as the powerhouse of Europe, with the clear plan from Disney’s point of view to use Sky as a vehicle for driving its Netflix rivaling streaming service in Europe. We would not be at all surprised to see Disney sell Sky back to 21st Century Fox in several years after it has exhausted its marketing ploys in OTT video – a prospect Disney obviously values at a colossal sum.
Disney is no expert in OTT video and has even less of a clue how to run a pay TV operator. However, what Sky will give Disney is scope for a well-rounded triple OTT offering – combining sports, movies and TV shows. It can apply the same principal in India, using Star India’s OTT service Hotstar and the hundreds of millions of viewers who tune in to cricket matches there, and combine this with movies and TV shows from both Hollywood and Bollywood to forge a serious competitor to Netflix in that region and the world.
The technology infrastructure, the customers and the content assets are all there to create what should be the perfect party for Disney, but what could very well turn into the perfect storm – something we will analyze in more detail next week.
As we suspected, competition regulations blocked Disney from buying the Fox broadcast network, as it already owns ABC.
“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Rupert Murdoch.