The Disney-Fox Deal: Who's Right?
The Disney-Fox Deal: Who's Right?
As an activist investor slams Bob Iger's $71B buy, the numbers reveal messy truths about how the mash-up panned out
Another week, another activist investor with Disney in his crosshairs. This time, it’s Nelson Peltz of Trian Group, an alternative investment fund that specializes in activist investor campaigns. I think some folks target Disney because it’s such a big name that they know they’ll get big time coverage. For example, Peltz made it on CNBC to talk about how “no one” has been on more boards than he has, and that he just wants to “help.”
(Disney, by the way, had a hilarious rebuttal slide you don't usually see in staid reports on SEC websites):
It’s worth noting how crazy these types of campaigns can be, particularly in hindsight. Back in 2020, Daniel Loeb’s big complaint was that Disney should basically spin-off everything and go all-in on streaming. Losses of $4 billion? Not enough! Go higher! Faster!
Just how much further would its stock be down if the company had followed Loeb’s advice?
But Peltz did bring up two interesting points: First, he said the 21st Century Fox deal, closed in March of 2019, was a bad investment by CEO Bob Iger (the stock is flat to down since the acquisition). Second, he said Disney should buy all of Hulu or “get out of streaming entirely.” I’ve written about Disney’s upcoming decision to buy out Comcast’s share in Hulu.1 (See here or here.) My take is aggressively moderate: I could see good reasons to do it and good reasons not to! How’s that for middle of the road?
Frankly, that’s how I feel about the Disney/Fox deal too: it was a fine deal at the time, but probably about $20 billion too expensive (the acquisition price was $71.3 billion; a good $65 billion more than either the Lucasfilm or Pixar deals). Since I haven’t looked at the Fox deal in a long while, it seemed worth diving in to judge Peltz’s complaint. Was Disney wrong to buy 21st Century Fox? With a few years’ hindsight, let’s answer that, plus we’ll look at…
Whether or not Disney “made money” on the Fox deal
How Fox’s traditional businesses lost value since the deal closed
Why I think Fox’s IP and library still were particularly valuable for Disney
How the Fox acquisition drove Disney’s streaming growth
The zombie state of Fox the film studio