21st Century Fox

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  • May 20, 2019

    Disney gets the final piece of Hulu

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    Disney announced that it would acquire Comcast’s 33% share of Hulu in a put/call agreement that can be enacted by either party from January 2024, while taking full operational control of the vehicle immediately. Under the agreement Disney will pay Comcast a minimum of $9 billion for its current stake, provided Comcast fulfils agreed capital calls, which going forward would be just over $500 million/year. Disney secured the continued licensing of NBCUniversal content for Hulu, contributing about 30% of Hulu’s library, but Comcast can loosen obligations to Hulu for the launch of its own SVOD service in 2020.
  • December 11, 2018

    Hulu casts a spell

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    When its acquisition of 21st Century Fox closes, Disney will own 60% of Hulu. If it bought Comcast’s 30% stake (and WarnerMedia’s 10%), it could fully leverage the platform for its US direct-to-consumer strategy. Comcast’s Hulu stake has little strategic value to it. We argue it should sell to Disney in exchange for long-term supply deals for ESPN, as well as for the upcoming Disney+ and Hulu, similar to its recent pacts with Amazon Prime and Netflix. This could naturally be extended to Sky in Europe depending on whether Disney decides to launch all direct-to-consumer or sticks with pay-TV in certain markets.
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  • October 25, 2018

    Disney, Fox, Sky and Comcast: future relationships

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    With Comcast’s acquisition of Sky confirmed and Disney’s acquisition of 21st Century Fox on the path to regulatory clearance, how will the relationships of the various parties evolve?. Disney is betting on a standalone SVOD service in the US. However, its content deal with Sky in Europe is lucrative, and the performance of DisneyLife in the UK suggests its US strategy may not fit elsewhere. Sky’s relationships with Disney and Fox are crucial to its business. A joint pursuit to maximise returns from IP and distribution in Europe would be economically efficient for both Comcast/Sky and Disney/Fox.
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  • October 3, 2018

    What Sky means for Comcast

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    Comcast’s £30.6 billion acquisition of Sky brings to an end the long-running ownership battle since Disney agreed to tender Fox’s 39% stake to Comcast, also ending the Murdoch Family Trust’s interest in Sky. Comcast’s US domestic cable and global NBCU media businesses complement Sky’s European operation. Sky’s telecoms business is likely to expand, while the TV side should benefit from NBCU’s global distribution might, with greater revenues generated by its original content. Fox’s long-running battle with UK regulators over the public interest dimensions of the proposed Sky acquisition has also ended. Plurality of media is preserved by Comcast’s undertakings to support Sky News for 10 years.
  • August 1, 2018

    Hulu: Why Disney wants 21st Century Fox

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    Disney’s potential acquisition of certain 21st Century Fox assets is assuredly a play for further scale at a time when the company’s traditional domain, the family home, is increasingly welcoming services such as Netflix. The deal will consolidate Disney’s dominant film business. But also, the robustness of traditional television, especially 21CF’s cable interests, along with IP assets, will allow Disney to better control the inevitable viewer transition from linear to online and on-demand. Becoming the one media company with both a strong broadcast and online offering—the control of Hulu, a new Disney streaming service, ESPN+ and other add-on services—could grant Disney the ability to navigate the storm of change and dictate its own future.
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  • April 19, 2018

    Fox offers sale of Sky News to clear merger

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    The Competition and Markets Authority (CMA) will report on the public interest (PI) aspects of the Fox/Sky merger on 1 May to Secretary of State (SoS) Matt Hancock, who will announce his decision on 13 June to the Commons. Fox has offered to sell Sky News to Disney, which will prevent the Murdoch family from ever exercising control or influence and might appease opponents of the merger. The CMA is likely to advise the SoS to clear the merger, conditional on the Sky News sale to Disney, which the SoS could accept. Fox will then participate in the end-game for Sky, where Comcast is also a determined bidder.
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  • February 5, 2018

    CMA issues provisional findings in Fox-Sky

    The Competition and Markets Authority (CMA) has provisionally found that Fox’s acquisition of Sky is against the public interest on media plurality grounds, although it could proceed with an appropriate remedy. The CMA found the merger would give the Murdoch Family Trust (MFT) and family members “too much influence over public opinion and the political agenda”. The CMA now enters the challenging remedies phase. Fox could offer an Editorial Board for Sky News pending finalisation of Disney-Fox (by 2019). Third parties seem likely to continue to seek to prohibit the merger
  • October 23, 2017

    21CF/Sky transaction heads to the CMA

    21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018. Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process. A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively.
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    October 17, 2017

    News and Facebook

    Even though Facebook is not a producer of news, 6.5 million UK internet users claim to mainly source their news from the platform. Posts and shares by friends in the user's network, in the context of Facebook's algorithm, determine the order of stories in the personalised News Feed, removing the control of the news agenda that publishers have for their websites. Premium publishers operating a paywall (The Times, The Financial Times) have a lower key approach to Facebook than publishers generating advertising revenue from referral traffic to their websites or from on-platform consumption of Instant Articles. The latter will seek to stimulate social media engagement, optimising stories through attention-grabbing headlines, and installing Facebook’s share and like buttons on their websites. Case studies of the news stories that were prominent on Facebook (measured by likes, comments and shares) in the periods leading up to the Brexit Referendum and General Election 2017 votes respectively demonstrate that newspaper brands (the Express for Brexit, and The Guardian for the General Election) achieved the highest reach on Facebook during these periods, despite being ranked below other news brands (BBC in particular) in terms of traffic to their websites
  • European scripted content - Rising demand and consolidation
    European scripted content - Rising demand and consolidation
    July 11, 2017

    European scripted content

    The US scripted content boom is spilling over into Europe: Free-to-air TV drama ratings have proven resilient but as costs and audience expectations have risen budgets are under pressure, necessitating flexible co-financing arrangements with American broadcasters, and Netflix and Amazon. Pay channels have boosted output—with uneven results. Long-term IP control is a key factor behind independent production consolidation, led by broadcasters seeking a secure stream of content and diversification away from advertising. Notable developments include the new wave of Berlin-based, internationally-financed series, the rise of domestic French content and Sky Italia’s edgy originals, Telefónica’s giant leap into Spanish dramas, and the continuation of Britain as an export powerhouse.

  • March 21, 2017

    21CF and the bid for Sky: state of play

    Secretary of State Karen Bradley has intervened on two UK public interest grounds in 21CF’s bid for 100% ownership of Sky: media plurality, as in 2010, and a commitment to broadcasting standards, new in 2017. Ofcom will assess any implications of 21CF’s full control of Sky on whether it is ‘fit and proper’ to hold a broadcast licence, reporting back on 16 May. Undertakings are a live issue in the 2016 bid, notably to protect the editorial independence of Sky News, noting the bid faces determined opposition from certain quarters.
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    November 17, 2016

    The studio model: stay tuned!

    US entertainment groups have not been disrupted by the rise of digital media. Long running franchises drive growth across diverse sectors, starting with pay-TV and SVOD. US television advertising is rising in line with GDP, while the online video ad market is flourishing, with much appearing alongside the majors’ scripted content. Studios’ cable channels are their most profitable assets, but M&As with distribution platforms, including Comcast’s acquisition of NBC Universal, have usually failed to deliver synergies. The Donald Trump presidency could leverage hostile public opinion towards mergers to undermine the AT&T bid for Time Warner; but it could also stimulate M&As if it granted tech companies a tax break to repatriate profits. A more protectionist administration could also bring about a less benevolent attitude towards majors’ foreign operations.

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    August 31, 2016

    The matter of Peak TV, and what it means for the UK

    Whether the US has reached “Peak TV” —the apogeic volume of original scripted series—is debatable, but the mass of content being produced is unparalleled. As television continues its transition from a disposable medium to a permanent one, and an increasing number of outlets are creating original, scripted programming to keep up or differentiate, does this American explosion have ramifications for the UK consumer or broadcaster? Simply put, the UK’s more concentrated television landscape limits exposure. And, counter-intuitively, an unsustainable focus on scripted drama could play into the hands of the traditional broadcasters, whose future strength may lie in the diversity of their offering.

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    July 22, 2016

    Mid-form video: Beyond the long and the short of it

    Video content is crudely defined. If something is not very short (<10 minutes) then it tends to be considered long-form. But there is a middle ground - one which displays a distinctive combination of characteristics in terms of production, broadcasting and viewing. Mid-form video (between 10 and 20 minutes) has the ability to carry the narrative arcs normally associated with long-form programming, whilst also retaining the snackable and shareable attributes of short-form. The footprint of mid-form is, so far, small. However, it is growing, as its unique qualities, such as excellent ad completion, become more readily recognised.

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    July 1, 2015

    A new Fox bid for Sky: when, not if

    News Corp’s original bid for full ownership of BSkyB was withdrawn because of the phone hacking scandal. It was never blocked by regulators. Had it not been for the scandal, the bid would almost certainly have been approved. With the phone hacking scandal fallout largely over and the election of a friendly government, the climate is now much more favourable to a renewed bid. With undertakings, we believe it would be approved by regulators. The increasingly global scale of TV and film distribution means the commercial case for the bid is, if anything, stronger now than in 2010. The questions are simply whether the right price can be agreed, and how high up it is on James Murdoch’s list of priorities.

  • May 7, 2015

    US and UK TV ad markets – apples and pears

    The US is seeing steep decline in measured TV viewing by younger age-groups and rapid increase in digital media adspend, prompting fears about the future of TV ad revenues across the major broadcasters and cable networks. The UK has seen similar trends, prompting suggestions that it will see similar effects. However, comparison of US and UK TV ad revenue trends since 2000 shows big differences in the underlying growth rates after taking economic factors into account. These undermine the inference that the decline in viewing and rise in digital adspend will have similar effects on either side of the Atlantic. Examination of the US and UK TV ad markets further points to big differences across a raft of major variables relating to supply and airtime trading practice, such as can be expected to yield very different outcomes with respect to TV ad revenue growth.