How The Disney Monopoly Buying 21st Century Fox Is Not Best For Business

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Two days ago, it was reported that 21st Century Fox has held talks to sell most of the company to Walt Disney Company. In addition to the movie studio, TV production, and international assets, Disney would also add entertainment networks such as FX and National Geographic. Now while most people who heard this news celebrated the idea that X-Men characters would finally become a part of the Marvel Cinematic Universe, I was far more concerned with how this deal could impact the entertainment industry on a long-term bias. Disney is king when it comes to their properties and their standing in the business. Owning Marvel and Star Wars is only the tip of the iceberg of Disney’s power and reach in the entertainment business, but is Disney gaining, even more power a good thing for the business? One could argue a move of this magnitude could put Disney one step closer to a monopoly on entertainment and here’s how this move would set them up in the future.

Let’s set the stage, Disney is already in control of a lot as far as entertainment and media go. Disney currently owns the following properties: Marvel Entertainment & Studios, Lucasfilm, ESPN Inc., ABC Entertainment, Pixar, A&E Entertainment, and 30% of Hulu. Trust me this is only scratching the surface and I didn’t even mention the Themeparks and their own library and properties. So what would happen if Disney took over 21st Century Fox? They wouldn’t be a monopoly overnight but it would raise a serious discussion. The rumored deal would include 21st Century Fox’s cable networks, its film and TV studios, Foxtel the Australian outlet, Sky an enormous British pay-TV company, as well as a controlling interest in Hulu (The deal would give Disney 60% ownership of the streaming service).

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The first group who should be concerned is Netflix. Disney is currently planning to launch its own streaming service and it’s a very real possibility that it could pull such properties like Daredevil, Punisher, Jessica Jones, and Luke Cage for the interests of its own service. Not to mention Disney would have control of Netflix’s direct competitor Hulu, meaning the company would get hit on potentially two fronts.

The next group that should be concerned is the movie theaters. As Disney gains more control of Hollywood film properties, the more power they will gain to throw their weight around and make things more difficult for theaters showing their movies…which they are already doing. According to the Wall Street Journal, Several cinema owners have voiced their grievance with Disney, who are said to have given theatres strict rules on how the movie is shown, and how much of the revenue will go to Disney. The list of demands includes Disney receiving 65% of revenue from ticket sales, the highest percentage a Hollywood studio has ever demanded. They will force theaters to screen the film in their largest auditorium for at least four weeks. The WSJ has also reported that if a theatre were to break these rules, they will also have to fork out an extra 5% of ticket revenue, bringing the total to 70%. Now with Disney being the big dog in town, can you imagine the demands that they can make with even more control of the film industry and more titles that will have to be negotiated with them?

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Getting a bit worried yet? Well, let’s not forget the impact on the industry itself. With Fox under its wing, Disney would control a significant portion of the film production in Hollywood. Not only would they control what gets made, but who’s gets cast and who they allow to cover them. Now I joke a lot about Disney buying good reviews (which is probably true) but Disney did, in fact, ban the Los Angeles Times from covering their films because the Times ran a two-part series on the company’s business ties with Anaheim that Disney considered unfair…yeah, Disney legit banned the LA Times from reviewing their movies because of a negative story written about their theme parks. Do you really want to give someone like that MORE power over the industry? For a company that already has 26% of the market share in movies, if Disney’s current trend becomes a window into the future, then we will see remakes, reboots, and live action remakes and reboots for the for foreseeable future. If they control what critics can say, 100% scores on RT will be the norm whether it’s deserved or not.

The deal with Fox is on ice for the time being but if the idea of Disney buying Fox only makes you happy because you think you are going to see the Hulk fight Wolverine in a movie, you aren’t looking at the bigger picture here. If you love R-rated films like Die Hard and Deadpool, do you really trust them under the umbrella of the mouse? More importantly, will you really be happy with Disney running a dictatorship over the film industry? An outright monopoly won’t happen with this deal, but it definitely won’t be too far away from it if it does.

 

 

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