Question

Evaluate Disney’s current situation and its plan to acquire 21st Century Fox according to the BBB framework. Do you think Disney will be able to create synergy?

BBB framwork is Build, Borrow, Or Buy: Solving the Growth Dilemma the book

Answer 1

Disney announced an arrangement to acquire 21^st Century Fox for $52.4 billion in stock where the company is expected to receive Fox's movie studios, Nat Geo and FX networks, Asian pay-channel Star TV and stakes in Sky, Endemol Shine Group and Hulu regional sport networks.

Furthermore indulging on Disney’s pledge and assurance to convey the highest quality branded entertainment the acquisition of 21^st Century Fox assets would indeed facilitate Disney to formulate more pleasing and attractive content, develop globally more direct relationships with customers and deliver a more convincing entertainment experience to customers wherever and however they prefer and desire.

The acquisition values the collective Fox business at approximately around $30 per share after the acquisition deal being announced where the total deal value is roughly estimated around $66 billion with Disney supposing $13.7 billion of Fox's net obligation and liabilities.

Furthermore the acquisition would facilitate to boost and strengthen Disney's plans to develop into a foremost and leading streaming service platform enabling it to become an enormous threat to Netflix as it would be able to participate and contend in terms of trying to sell a subscription offering at a time where there is so much rivalry and struggle for subscription-based services.

Disney top level management said that acquisition of Fox would facilitate to yield at least $2 billion in terms of savings in expenditures. Furthermore Disney would issue about 515 million new shares to present Fox shareholders who would have about 25 percent stake in Disney business. It further also announced about its plans to initiate a stand-alone streaming service and formulate a stand-alone ESPN digital service with access to nearly about 10,000 additional live sporting events.