Question

Seminar in Business Finance: Group Project

This group project includes One part: Case Study .
Part I:
We have studied several cases this semester which focus on a common corporate action: merger or acquisition. In your group project please select a recent M&A example, either successful or unsuccessful, recent is defined as having occurred in the last three years.

You will be tasked with preparing a case study to explain the details of the corporate action. Specifically what led to the acquirer offering for the target firm. Similar to other case studies we have analyzed this should include an explanation of the performance of the target, acquirer and industry. You should highlight any challenges the acquirer faced in pursuit of the target.

Below are steps that are necessary to complete the case study:
1.   Start by researching the acquirer and the target companies. You should provide a picture of what is driving their decision to merge. What are their strengths and weaknesses? How do they differ/agree in terms of management strategy/philosophy, operations, size, financial strength, technology, etc.
2.   Include an explanation of market/industry conditions and the role of the firm within the industry, for both the acquirer and target firms. How is this impacting their decision to merge?

My case study is about Walt Disney Acquires 21st Century Fox
Thank you!

Answer 1

Disney's New Age strategy to acquire 21st Century Fox

Walt Disney declared in late 2017, that it would acquire assets of 21st Century Fox. This acquisition would cover it's cable channels, movie studio, regional sports networks and TV production company.

Walt Disney: Walt Disney is a global entertainment company by operating mainly in four various segments such as Parks & resorts, media networks, consumer products & interactive media and studio entertainment. Being a Dow 30 company for many years, Disney's revenue was $55.1 billion in 2017.

21st Century Fox: Another leading company spanning it's operations in film, cable, pay TV, broadcast and satellite assets with coverage across six continents. Fox also has in its hand 39.1 % of shared of Sky(another leading entertainment company in Europe with presence in 5 countries).

A few facts at the back drop: The entertainment industry was facing a major challenge in terms of its consumers as there was a tremendous decline in people watching movies in the US as streaming emerged as a major threat. In this context, there was a need for a synergy by going ahead with the new age technology embedded with proper content. This thought encouraged both the company CEOs to proceed with this corporate action. 21st Century Fox had a handfu entertainment properties like Avatar, National Geographic etc. with appealing contents. Moreover, Fox had stake in Star in India and Sky in Europe. Disney's strength mainly revolved around its name and presence in Europe and America. The acquisition majorly would be a kind of integration of the business operations and also a diversification. The deal would enhance the post acquisition company to fetch the consumers from most populated Asia Pacific region.

What are the major challenges of this deal in industry context?

What are the beneficial aspects of this deal for both the companies?

Are these strategies could be adopted by other companies in the entertainment industry in this modern era?