The Crown Jewels of Streaming: Disney’s $71 Bn Fox Deal
The race for content supremacy.
The following visual outlines the corporate restructuring and asset transfers that laid the foundation for Disney’s acquisition of 21st Century Fox in 2019.
Disney acquired the majority of 21st Century Fox’s assets, which led to the company’s dissolution. The acquired assets were later rebranded as 20th Century Studios, Searchlight Pictures, and others. This rebranding aimed to avoid confusion with the newly formed Fox Corporation, which remained under Murdoch family ownership and retained assets such as Fox News and Fox Sports.
Deal Overview
Acquirer: The Walt Disney Company
Target: 21st Century Fox
Total Transaction Size: $71.3 billion
Closed Date: 20th March 2019
In a landmark move that reshaped the media industry, The Walt Disney Company acquired the majority of 21st Century Fox’s assets for $71.3 billion on 20th March 2019. Facing growing competition from emerging streaming platforms Netflix, Amazon, and YouTube, Disney sought to reinforce its market position and competitive edge. The acquisition led to the dissolution of 21st Century Fox, with key assets rebranded under Disney. While the deal significantly increased Disney’s market presence, it drew criticism regarding concerns about reduced competition and consumer choice.
Company Overview: Acquirer - The Walt Disney Company
Founded: 1923
CEO: Bob Iger
Market Cap: $168.8 billion
Revenue: $69.5 billion
EV: $176.7 billion
LTM Revenue: $56.9 billion
LTM EBITDA: $17.25 billion
LTM EV/REVENUE: 3.1x
LTM EV/EBITDA: 10.2x
Early History and Growth:
In October 1923, brothers Walt and Roy Disney founded the Disney Brothers Cartoon Studio in California, now known as The Walt Disney Company. What began as a small animation studio has since grown into one of the most powerful media conglomerates in the world. Walt Disney, a talented artist, initially drew cartoons for various publications under the name of his first animation studio, Laugh-O-Gram. However, despite creative ambition and talent, poor financial management led to the firm’s bankruptcy. After relocating to California, Walt sold Alice’s Wonderland, a short film from Laugh-O-Gram, and secured a deal to produce six additional pictures. This deal provided the financial foundation for the Disney Brothers Cartoon Studio.
After years of success in animated shorts and feature films, the company expanded into nature documentaries, live-action films, and television programs. The firm’s consistent growth was later struck by World War II, leading to increased costs and financial challenges. However, Disney rebounded with hits like Cinderella (1950) and began venturing into live-action films. Disney later revolutionised the entertainment industry by launching Disneyland in 1955 in Anaheim, California, introducing the world to theme parks. In 1971, Walt Disney World opened in Florida, cementing Disney’s theme park empire.
Strategic Acquisitions and Market Challenges:
Following the deaths of both founders, the company’s profits were driven by its classic film catalogue and the continued success of Disney World, now a global tourist attraction. By the mid-2000s, Disney's own animation efforts were struggling, with recent films underperforming both critically and commercially. In contrast, Pixar had built a reputation for producing blockbuster hits with innovative storytelling and cutting-edge technology. Acquiring Pixar offered Disney an opportunity to rejuvenate its animation sector by integrating Pixar's creative processes and technological advancements. In January 2006, The Walt Disney Company announced its intention to acquire Pixar Animation Studios for $7.4 billion in an all-stock deal. Subsequent acquisitions, including Marvel Entertainment (2009) and Lucasfilm (2012), solidified Disney’s control over high-value intellectual property. However, consumer preferences would soon undergo significant change.
Unlike previous decades which favoured physical, traditional platforms like cinemas and cable TV, digitalisation and lower consumer costs catalysed the large-scale shift toward on-demand streaming. Streaming services like Netflix gained popularity by offering more affordable, convenient access to content. In 2019, box office revenue in the U.S. was 4.4% lower year-over-year, further underlining these evolving consumer preferences. With audiences preferring home viewing, the Hollywood entertainment giant, Walt Disney Company, was under mounting pressure from new competitors like Netflix, Amazon, and YouTube.
To regain its protective moat and reassert control over content distribution, Disney pursued a major acquisition that would support the development of its own Direct-to-Consumer (DTC) platform, eventually leading to the acquisition of 21st Century Fox.
Company Overview: Target - 21st Century Fox
Founded: 2013
CEO: James Murdoch
Market Cap: $83.4 billion
Revenue: $30.4 billion
EV: $104.4 billion
LTM Revenue: $29.2 billion
LTM EBITDA: $6.5 billion
LTM EV/REVENUE: 3.6x
LTM EV/EBITDA: 16.1x
Formation and Structure:
21st Century Fox was established in 2013 following the split of Rupert Murdoch’s News Corporation into two separate entities: News Corp and 21st Century Fox (see Figure 1). Murdoch argued that separating the rapidly growing entertainment division from the traditional publishing arm would enable each firm to pursue autonomous strategies, refine operational focus, and increase shareholder value. He asserted that the move would "unlock the true value of both companies and their distinct assets."
Previously, the corporation’s publishing arm suffered reputational and financial fallout following the phone-hacking scandal involving the News of the World tabloid in the UK. The division sought to protect the more lucrative entertainment assets from the potential knock-on effects of similar controversies. The separation was finalised on 28th June 2013, with both companies commencing operations and trading independently on the NASDAQ stock exchange.
At its peak, 21st Century Fox was a global media conglomerate operating across several verticals:
Film Production – 20th Century Fox, Fox Searchlight Pictures, Blue Sky Studios
Television Production – Fox Television Studios, FX Networks, National Geographic, and a partial stake in Hulu
Broadcasting – Fox Sports, Fox Network
Cable & Satellite – Sky UK, Star India, Fox Networks Group
Strategic Failures and Vulnerability:
Despite delivering steady shareholder value, a strategic misstep in 2014 marked the beginning of Fox’s decline. In an attempt to acquire Warner Bros. for $80 billion, the Fox executive board announced an aggressive expansion plan. The announcement backfired, triggering a drop in share price due to concerns over the deal’s debt burden and uncertain synergies. Under pressure from investors, the acquisition was abandoned, resulting in wasted resources and reputational harm.
Moreover, Fox’s struggles to compete with tech-driven streaming platforms only compounded this failure. As Netflix and Amazon pioneered the streaming industry, conventional media companies experienced crippling market shares, with Fox’s traditional cable and satellite models a shadow of their former selves. The failed Warner Bros. bid left the company vulnerable and unadaptable to the rapid traction of DTC models.
With growing pressures, Fox leadership acknowledged the need for capital to survive this intensifying competition or otherwise face certain bankruptcy. The company decided to divest key entertainment assets in order to refocus on core broadcasting and news segments. This strategic pivot aimed to reduce exposure to the streaming sector and stabilise operations.
The move made Fox a desirable acquisition target for Disney, which was seeking to strengthen its content library and reinforce its position in the streaming market.
Motivation:
Strategic Alignment and Rationale:
As mentioned earlier, digitalisation and a series of strategic missteps led both firms, operating in the same market, to find themselves reaching similar tipping points. At the time of the acquisition, the deal presented a win-win opportunity. For Fox, selling its entertainment assets allowed it to refocus on the news and publishing sectors, while also raising capital for reinvestment and stabilising operations. For Disney, acquiring 21st Century Fox enabled access to its extensive and well-recognised film and television library. Disney had already acquired majority ownership of BAMTech, a key player in streaming technology. Gaining control of 21st Century Fox’s intellectual property (IP) and Hulu stake profusely improved Disney’s chances of launching a competitive Direct-to-Customer (DTC) service.
Franchise Value and Intellectual Property Integration:
Disney’s primary motivation was tapping into Fox’s valuable IP catalogue. The acquisition gave Disney access to capitalise on culturally significant franchises, which could be monetised across streaming, merchandise, and theme parks. Key assets included:
Marvel’s X-Men & Fantastic Four – Prior to the deal, Fox owned the film rights to X-Men, Deadpool, and Fantastic Four, blocking their integration into the Marvel Cinematic Universe (MCU). The acquisition resolved this and allowed Disney’s Marvel Studios to unify its universe.
Avatar – Avatar (2009) was the highest-grossing film of all time until Avengers: Endgame. Acquiring the rights to James Cameron’s franchise was a major victory. Its sequel, Avatar: The Way of Water (2022), grossed over $2.32 billion, further strengthening Disney’s revenue streams.
The Simpsons & Family Guy – These long-running, globally recognised, and highly profitable animated shows broadened Disney’s content range, particularly for adult audiences.
Platform Expansion and Streaming Strategy:
By absorbing Fox, Disney secured low-risk, high-return IPs capable of generating revenue across multiple channels: movies, merchandise, theme parks, and streaming. The acquisition also crucially advanced Disney’s DTC strategy in several ways:
Hulu Control – By acquiring Fox’s 30% stake, Disney increased its total share in Hulu to 60%, giving Disney effective control and positioning Hulu as a more mature alternative to Disney+.
National Geographic & FX – These assets further diversified Disney’s streaming, television content, and appeal beyond its traditional family-friendly branding.
Economies of Scale and Strategic Advantages:
Ultimately, by leveraging Fox’s assets, Disney aimed to strengthen its streaming platforms, reduce dependency on cable TV, and secure long-term digital dominance. However, this acquisition also helped Disney achieve economies of scale, integrating Fox’s assets into its existing business model. There are several strategic advantages to be noted:
Cost Savings & Efficiency – Merging production and distribution operations enabled Disney to reduce redundancies and increase profitability.
Market Share – Post-merger, Disney controlled nearly 40% of the domestic box office.
Bargaining Power – Owning more IP gave Disney stronger negotiation power with theatres, retailers, and advertisers.
Integration
Disney's $71.3 billion acquisition of 21st Century Fox was a transformative deal intended to boost its streaming strategy, consolidate market share, and enhance its IP portfolio. As with any large-scale merger, success hinged on the effective integration of operations, staff, and assets. Disney’s rationale for the acquisition centred on its ambitious streaming strategy to modernise its domain, as will be outlined.
Phase 1 (2019-2020): Rapid Consolidation and Streaming Reinforcement:
In 2019, Disney shut down Fox 2000 Pictures and initiated major layoffs of up to 4,000 employees, including senior Fox executives. Layoffs continued for several months, impacting departments like distribution, marketing, production, and visual effects.
In April and May 2019, Disney cancelled several Fox projects such as Mouse Guard, News of the World, and On the Come Up, delaying others including Ad Astra and The New Mutants. Post-2019 Fox Marvel films were removed from Disney’s release schedule. Avatar: The Way of Water was pushed to Christmas 2022, with future Avatar and Star Wars sequels set to alternate annually through 2027.
Major Fox franchises, Simpsons, X-Men animated series, and Avatar, were quickly relocated to Disney+ or Hulu.
In January 2020, Disney rebranded Fox Studios, removing the “Fox” name to avoid confusion with the now separate Fox Corporation. 20th Century Fox became 20th Century Studios, and Fox Searchlight Pictures became Searchlight Pictures.
Similarly, Disney sold most of FoxNext’s gaming assets – including FoxNext Games LA and Cold Iron Studios – to Scopely. Fogbank Entertainment was also closed, as in-house gaming no longer aligned with Disney’s strategy.
Phase 2 (2021-2024): Operational Efficiency and Creative Trade-Offs:
Blue Sky Studios Shutdown – Post-acquisition, Disney owned three animation studios: Walt Disney Animation, Pixar, and Blue Sky. Despite undeniable esteem cultivated through profound successes like Ice Age and Rio, Blue Sky’s output lagged behind the others. Amid mounting debt burdens and COVID-19, there were cost-cutting pressures, resulting in Disney shutting down Blue Sky in 2021, laying off 450 employees. A farewell clip titled The End, featuring fan favourite Scrat, was released. While the studio’s termination brought short-term savings, Disney’s long-term costs have persisted, with some arguing that Blue Sky’s creative potential was undervalued.
Avatar Franchise – Disney fully embraced the Avatar IP, integrating it across theme parks (e.g., Pandora – The World of Avatar), merchandise, and sequels. The Way of Water earned $2.32 billion, making it the third highest-grossing film of all time.
Marvel’s X-Men & Deadpool – Disney immediately began folding X-Men characters into the MCU, teasing their future through cameos in Doctor Strange in the Multiverse of Madness and The Marvels. Deadpool 3 was announced as the MCU’s first R-rated film.
The Simpsons – Fox’s longest-running animated series became a Disney+ staple, helping attract older audiences.
Theme Parks – In addition to box office profits, licensing, and revenue streams, newly acquired IPs were promptly integrated into Disney parks.
Challenges and Underperformance:
While key synergies were achieved, significant challenges in other areas have made Disney’s integration of Fox’s assets a mixed success. Prior to the acquisition, Disney projected $2 billion in cost savings through operational efficiencies, elimination of redundancies, and asset restructuring. Steps such as merging studio operations, reducing overlapping roles, and consolidating Hulu and Disney+ efforts have generally delivered this goal.
However, while some Fox properties contributed to financial gains, others struggled to fit within Disney’s ecosystem. The integration process led to layoffs, organisational restructuring, and even the closure of entire studios.
20th Century Studios Decline – Once a major force in the film industry, 20th Century Fox saw a sharp reduction in its release schedule under Disney. Many films were delayed, received little promotion, or were cancelled altogether. This was largely due to Disney’s strong focus on its core franchises: Marvel, Star Wars, Pixar, and Disney Animation. Projects scrapped included Mouse Guard, a fantasy adaptation cancelled just weeks before production, and Gambit, a long-delayed Marvel film starring Channing Tatum.
Box Office Disappointments – Several Fox films released under Disney failed to meet expectations:
Dark Phoenix (2019) – one of the worst-performing X-Men entries, with minimal marketing support from Disney
The New Mutants (2020) – Delayed multiple times and eventually released with little advertising or fanfare
West Side Story (2021) – Despite being a Steven Spielberg-directed project, the film underperformed at the box office, likely due to little promotional backing.
Outcome
Market and Financial Impact:
Disney’s acquisition of 21st Century Fox had a profound impact on both companies and the wider entertainment industry. The $71.3 billion deal significantly expanded Disney’s dominance, giving it control of around 40% of the U.S. box office and strengthening its position in the streaming market with the launch of Disney+. The acquisition increased Disney’s market valuation from $149 billion to $164 billion. Investor sentiment was reflected in the stock price, which rose from $115.6 pre-acquisition to $142.19 post-acquisition, with analysts widely viewing the deal as a strategic success.
Revenue steadily increased post-acquisition, aside from a temporary dip between 2020 and 2021 due to integration costs and pandemic-related disruptions. By 2022, Disney’s financials had rebounded, with improvements in ROI and ROA of roughly +4.5% and +3% respectively, signalling the deal’s long-term value creation.
Franchise Performance and Industry Reaction:
The acquisition enriched Disney’s content ecosystem, consolidating high-performing intellectual properties like X-Men, Avatar, and The Simpsons. Many of these franchises maintained or gained popularity. As highlighted, Avatar: The Way of Water became the third highest-grossing film of all time, while Deadpool retained its tone and fanbase during its transition into the MCU. However, some inherited assets underperformed. Films like Dark Phoenix and The New Mutants failed to meet expectations, underscoring the challenges of franchise management during integration.
The deal also resulted in approximately 4,000 layoffs, including high-profile exits such as Chris Aronson (President of Domestic Distribution) and Pamela Levine (President of Worldwide Marketing), along with several EVP-level executives.
As Disney consolidated operations, concerns about industry monopolisation and reduced creative diversity proliferated. For Fox, the sale allowed a sharper focus on its core businesses, news and sports, though it came at the cost of losing major entertainment assets.
The merger intensified competition in streaming, particularly with Netflix, while also giving Disney greater control over distribution and box office share. This raised questions about market power and potential pricing pressure, especially on tickets. Despite financial strain and regulatory scrutiny, the deal has ultimately solidified Disney’s position as a global entertainment leader.
House View
To fully evaluate the benefits and drawbacks of this acquisition, it’s important to consider where Disney stands today. The deal undoubtedly helped expand Disney’s content library and played a profound role in building a strong subscriber base, with 124.6 million Disney+ subscribers as of Q1 2025. It also gave Disney majority control of Hulu, strengthening its market position and establishing it as a dominant force in the streaming industry.
Following the acquisition, Disney has delivered outstanding box office results and gained access to an expanded range of iconic film and TV assets, attracting a more diverse consumer base. Yet, Disney+ lags considerably behind Netflix’s 300 million subscribers. While subscriber count serves as a useful indicator, Netflix’s decade-long head start, and established market infrastructure provide important context.
Nevertheless, Disney has proven its ability to scale quickly and now ranks among the top three global streaming platforms, indicating effective strategic follow-through, especially for a relative newcomer.
Key lessons and takeaways include:
Content scale is not enough – While the acquisition enriched Disney’s IP portfolio, streaming success also requires global agility, technological innovation, and strategic customisation of regional content — areas where Netflix still holds an edge.
Platform bundling is a strength – By controlling Disney+, Hulu, and ESPN+, Disney is uniquely positioned for cross-marketing and bundled subscriptions, capturing diverse audiences in a fragmented market, a competitive advantage.
M&A comes with trade-offs – The integration process involves layoffs, restructurings, and creative shifts, highlighting the cultural and operational challenges that accompany mega-mergers in creative industries.
In conclusion, while the acquisition didn’t overtake Netflix, it transformed Disney into a dominant streaming competitor, expanded its global reach, and solidified its future as a content powerhouse. The deal's long-term success will depend not only on content volume but on Disney’s ability to innovate, adapt, and sustain creative excellence in an increasingly competitive media landscape.
Sources
Walt Disney Company Investor Relations Announcements:
Walt Disney Company Annual Report 2019, 2020:
https://thewaltdisneycompany.com/app/uploads/2020/01/2019-Annual-Report.pdf
https://thewaltdisneycompany.com/app/uploads/2021/01/2020-Annual-Report.pdf
Fox Corporation Annual Report 2019:
21st Century Fox Annual Report 2018 (as per SEC):
https://www.sec.gov/Archives/edgar/data/1308161/000156459018021493/fox-10k_20180630.htm
The Official Disney Fan Club:
Vox:
https://www.vox.com/culture/2019/3/20/18273477/disney-fox-merger-deal-details-marvel-x-men
Fox Corporation Investor Relations Announcements:
The Wall Street Journal:
https://www.wsj.com/articles/disney-completes-buy-of-foxs-entertainment-assets-11553074200
Reuters:
Forbes:
ResearchGate: