What Disney’s 21st Century Fox Deal Means For Hollywood and Entertainment

On Friday, Disney and Fox’s shareholders voted to approve The Walt Disney Company’s $71.3 billion purchase of 21st Century Fox. While many people are looking at the surface level outlook of finally getting to see Wolverine teaming with Captain America in the movies, there are others far more concerned about what this means for entertainment now that Disney now officially owns a massive portion of the market share.

Now, fortunately, Disney will not take 21st Century Fox’s news and sports properties which mean Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, FS1, FS2, Fox Deportes, and the Big Ten Network are all safe from Disney’s hands. Now everyone knows that with the Disney purchase that Marvel Studios will receive the film rights to the X-Men, Deadpool, and the Fantastic Four but let’s look a little deeper and see what this deal actually means for the entertainment industry.

If you thought Disney controlling nearly everything you watch in film was bad, it’s about to get much worse. Walt Disney Studios Motion Pictures already has a 36% market share of films released in 2018 alone. Meaning Disney is responsible for 36% of the overall box office this year. If you add in the share from 21st Century Fox, the number jumps to 48%. That’s right; half of what you saw in theaters will now belong to Disney. The closest competitor is Universal at a mere 13.3%. Not only will Disney have half the market share, but they would have nearly half the production as well. The thought of one company controlling everything you see on the big screen should scare you. If you are sick and tired of superheroes movies and universes around them, this is terrible news for you because this guarantees that the superhero genre will live on and be controlled by one company for at least the next decade and likely longer. Sequels, Reboots, Remakes, Spinoffs…Hollywood is about to get a hell of a lot less creative and why would they have to be considering all the properties Disney now has to make money off of?

With such massive control of the industry, this means bad news for movie theaters on two fronts. Back in November, Disney demanded 65% of revenue from ticket sales, which is the highest percentage a Hollywood studio has ever demanded The Last Jedi. They also forced theaters to screen the film in their largest auditorium for at least four weeks. Failure to do so would result in a fork over about 70% of their revenues. With Disney now controlling half the production, they are in a position to make greater demands for their films which will end up hurting independent theaters the most. Let’s not also forget the possibility of fewer films being released in general, Disney’s control over production means that they will have major studio films set years in advance. It would not make financial sense for them to overload theaters with so many films due to the fact that they would be in competition with themselves, Disney could very well opt to limit overall releases to maximize their profits meaning less films for the general audience.

The second problem for theaters is Disney’s focus on creating a streaming network. With the new deal, Disney now owns 60% of Hulu and now has a controlling interest in the service. Despite this, Disney has been rumored to launch a new streaming service in 2019. This gives them the option of withholding their releases from movie theaters to put on their own services. This move essentially crushes any bargaining power that the theaters have in distribution as Disney’s growth as a media giant gives them ironclad control over their properties. Not to mention this would put streaming competitors Netflix on notice.

It is impossible to grasp the unintended fallout of a deal like this. 5,000 to 10,000 people are likely going to be out of work. The blowback could even impact such industries like film review business. Last year, Disney tried to ban the Los Angeles Times from reviewing their movies after being critical of the company’s theme park influence in the city of Anaheim. The more power Disney takes, how will they retaliate against organizations and individuals who have opinions that they don’t like? What about the unions? How effective will they be against a major conglomerate like the house of mouse? How about industry writers and directors? We have seen plenty of times in the last few years that Disney has outright fired and tossed asides directors who don’t follow their vision. Ask Edgar Wright, Phil Lord, Christopher Miller, Colin Trevorrow and more. Disney has already displayed examples of authoritarian business practices and there is no incentive to change with this deal.

Now many will argue that this deal does not make Disney a monopoly. Right now, they would be correct, Disney owns nearly half, but not a majority of the production, so the question is; what would stop Disney from becoming that monopoly? After this deal, 21st Century Fox would be out of the picture. That means as far as major film production in Hollywood you would be down to Disney, Universal, Warner Bros, Sony, and Paramount as the major 5 studios. That’s it. 5 major studios would control everything. Out of those 5, who would be the next one to fall? The financial troubles of Sony Pictures have been well known for quite some time. Now they would not be going under any time soon, but let’s say Sony sells its company in order to cover losses…to Disney. Would they be a monopoly then? If you look at the market share and financials of Warner Bros, Paramount, and Universal could they stand in the chance of surviving against one company that controls more than they do with a 2 to 1 ratio combined? What if said companies were to merge in order to stay competitive? Does that mean more options for the consumer? No. That means what used to be a Big 6 will probably be a Big 2 or 3 and nobody will win in the long run with a selected few being the be all and end all of the industry.

As it stands, Disney now owns the big screen and is also primed to be the major player in the streaming world as well. Who knows what chance the free market of entertainment has going forward but the more Disney gains, the more the consumer loses.

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