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“Quite astonishing” if Murdochs sell 21st Century Fox

Reports suggest Disney has been in talks to buy a large portion of the company

A leading UK media analyst believes it would be “quite astonishing” if Disney were to buy 21st Century Fox.

According to a report from CNBC, Disney has been in talks to acquire “most of” 21st Century Fox, although it said the talks have now ended.

Alice Enders, head of research at Enders Analysis, told TVBEurope she is skeptic about the deal as the Murdoch family has always been “buyers not sellers.”

“The younger sons are still in their 40s, they’re very active in the assets that they have, they see entertainment and media as being their forte as opposed to newspapers which is their father’s passion,” said Enders. “So from a human element, you have to say why would the Murdoch brothers want to sell to anybody, not just Disney?”

“I think the existence of talks masks a much broader set of options that are being considered for eventually a collaboration or maybe a sale, although we see Disney as not really needing to buy Sky or 21st Century Fox,” said Enders. “Disney occupies a very unique space in the studio market, and the heart of what it’s doing is selling entertainment and products to children. It’s not absolutely clear what it would be seeking to get out of a hook-up with 21st Century Fox as a studio.”

However, Enders said the distribution side of Fox’s business could be what’s attracting Disney. “Of course 21st Century Fox owns 39 per cent of Sky today and presumably in the future will own 100 per cent of Sky potentially. Obviously Sky is the most interesting pay-TV operator in Europe for a US studio. So Disney probably doesn’t need studio assets but it might enjoy having a footprint outside the US in the distribution area.”

According to the CNBC report, Fox would look to retain its sports and news properties, something Enders believes would be a strategic move on their part. “You can’t get this transaction through in the US unless Fox keeps its sports channel because of ESPN. But then the foreign assets become more important. We think it would be quite astonishing for the Murdoch brothers to cease their ambition of becoming one of the biggest players in this space in terms of a consolidator of US studio businesses. It would be quite a surprising turn around for them to just throw in the towel.”

“The problem is if you sell something, then you’re stuck with loads and loads of cash,” said Enders. “As you know when you buy a house, you sell one and then you have to pay more to buy another one. The shareholders of 21st Century Fox would have to ask themselves ‘what are we going to do with the money?’”

“I don’t think Disney needs them very much and I think a joint venture is much more amenable to the ambitions of the younger sons to be honest. It makes sense that everything might be on the table but I somehow suspect that doesn’t fit with the 21st Century Fox that we all have come to know and love.”