Matching Walt Disney Co. (DIS) with the studio assets of Twenty-First Century Fox Inc. (FOXA) hardly means a death sentence for Netflix Inc. (NFLX), but it should be a more intriguing battle in a couple of years And gaining control of Fox's regional sports networks could do wonders for the appeal of ESPN's planned Disney broadcast service.
But some important questions still need to be answered. And it is likely that Disney has not worked on all of them.
According to reports, Disney is close to reaching an agreement – potentially more than $ 60 billion – to buy all the Fox service saved for Fox News, Fox Business, Fox Broadcast Networks and Fox Sports. Fox television and film studio assets will be acquired, as will the Star India television network unit, the Nat Geo and Fox holdings in Hulu (30%) and the European pay television giant Sky (39 %). A $ 14.1 billion deal through which Fox would buy 61% of Sky that it does not yet have, awaits regulatory approval.
Disney shares have risen 6% since the first report of a possible agreement came on November 6. Thanks to a wider technological correction, Netflix shares have dropped by 7% during that time. They are still over 50% in the year.
A movement related to the broadcast that is practically a fact if an agreement is reached: Marquee Fox and the TV franchises will be added to the broadcast service that Disney plans to launch in 2019. That service is already programmed to have exclusive rights to broadcast Disney, Pixar, Marvel and Star Wars movies once an agreement with Netflix expires at the end of the decade, as well as to present Disney Channel and original shows. With Fox on board, Disney could add movie franchises such as X-Men, Fantastic Four, Avatar, Planet of the Apes, Home Alone and Die Hard, as well as television franchises like The Simpsons, Futurama, X-Files, The Americans, Sons of Anarchy and American Horror Story.
That clearly spells a more serious rival for Netflix, particularly in terms of the ability of the service to attract both adults and children. In addition, Disney, which has said its streaming service will be "substantially cheaper" than Netflix when it launches, may decide to extract from Netflix the Fox programs that the transmission giant still has access to.
Reed Hastings & Co. is probably not panicking: Netflix's $ 109 million subscriber base allows it to fund a content budget that will be in the range from $ 7 billion to $ 8 billion next year, and has demonstrated the ability to use the data collected from its more than one billion hours of weekly viewing to customize video recommendations and inform their content funding decisions
In addition, Netflix has more than two years to prepare for life without the content of Disney, and will presumably use that time to make large investments in animated, science fiction and kid-friendly content. high definition transmission plan Netflix that costs only $ 11 per month after a recent price increase, it is likely that much of its user base will continue to consider the company's service as a big business.
That said, some consumers are worried about how their transmission bills are accumulating, and those who have access to Amazon.com Inc.'s first video (AMZN) through Amazon Prime subscriptions, could decide if they need to Choose between Netflix and Disney. And Fox's content certainly reinforces Disney's sales pitch for those consumers. On the other hand, some Netflix subs that remained registered for pay-TV services might see the launch of the Disney service as a better argument to cut the cable than to cancel Netflix.
Meanwhile, adding the 30% share of Fox in Hulu, the share of 30% of Disney will give Disney control of a transmission service that had 12 million subscribers from last year, and this year launched an online television service. But it is not a fact that Disney maintains a majority stake, since doing so would almost certainly destabilize the investors / content providers of Hulu Comcast (CMCSA) (NBCUniversal) and Time Warner (TWX), among others, Disney's plans of launch a rival service.
Stripping Hulu's stake by 49% or less would probably do a lot to keep Comcast and Time Warner happy. Disney could also be seen promising to continue licensing popular Disney and Fox television shows to Hulu, whose unparalleled library of television shows has been a key selling point, including making many of its film franchises unique to its new service.
the live sports front, Fox could do wonders for Disney's 2018 plans to launch an ESPN broadcast service, thanks to its control of 16 regional sports networks (RSNs) that collectively have broadcasting rights for dozens of great professional and university sports franchises.  Disney has clearly been wary of damaging ESPN's very lucrative pay TV affiliate rates through its broadcast service: it previously said the service would include MLB, NHL and MLS games, but said nothing about the games the NFL or the NBA. Disney could offer the sports content covered by Fox's regional networks, less the content covered by the regional Fox network to which a user has access through local pay-TV services, to the users of its ESPN broadcast service. .
But it is not yet clear what sports teams and leagues Disney could support in that way through a national broadcast service, or to what extent. Particularly given that the transmission of all the games of more than a dozen franchises of a major sports league would threaten the subscription services of the entire league as MLB.tv Premium and NBA League Pass.
However, adding Fox's RSN to its stable should do to increase the appeal of Disney's ESPN service to those who are already receiving ESPN pay-TV networks. In the same way that the addition of Fox's film and television franchises should greatly strengthen the Disney's planned transmission service, even if part of Fox's content also appears on Hulu and other platforms. Look for Disney to clarify your transmission plans after an agreement has been announced.