Murdoch's Dump is Disney's Pump

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I blogged in August that Netflix would reinvest around US$15.7 billion, or 22% of its then market cap on exclusive content. This was to protect its advantage over Disney, HBO, FB and others as they look to disrupt the disruptor (i.e., Netflix). I mentioned at the time it would not be a game for the feint hearted.

Well, Disney has raised the bet to a new level with a US$52.4 billion deal to acquire (if approved) most of the Hollywood interests of 21st Century Fox, the global entertainment and TV business controlled by the Murdoch family.

Murdoch dumps content, cable channels, international distribution and a crucial 30% interest in Hulu, giving Disney majority control of Hulu and allowing it to re-house its streaming content after withdrawing it from Netflix in August.

Murdoch's dump, assuming it is not blocked by regulators, will provide a much needed pump for Disney to strike back at Netflix and others. But this will also raise the competitive bar and as several warring parties try to build deeper and wider moats around their respective businesses a gargantuan amount of shareholder funds will be bet. Good luck boys and girls.

But back to Murdoch and another old economy leader in another disrupted industry - by that I mean it is no surprise this exit comes so soon after the Lowy's ~$33 billion sale of Westfield to France's Unibail-Rodamco. Disruption in both industries has been running in parallel and continues apace.

Take home point? Savvy dynastical baby-boomers like Lowy and Murdoch would not be monetising a collective ~A$100 billion of assets built with great precision and care over their respective lifetimes, unless they were convinced the proverbial was all but caught in the fan's blast zone.

Smart move by these families, because many others will not recognise the Ark that is before them, and sadly, they will drown in the great flood of technological disruption.

Mike

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NextLevelCorporate delivers independent and transformative corporate finance solutions to clients looking to reshape their competitive landscapes, in and out of Australia. We achieve this through the strategic application of Mergers & Acquisitions, Growth Capital and Special Situations advisory.