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Analysis: How Will Disney’s Acquisition of Fox Studios Affect the Industry?

December 17th, 2017

The Avengers: Age of Ultron

It was announced last week that Disney bought Fox Studios. To be more specific, they bought TV and movie production, cable channels, and the back catalog, but not Fox News, Fox Sports, or the local Fox TV stations. A lot of people have wondered what this will do to the industry. In my opinion, a lot of people have reacted in a disproportionately negative way. I will look at some of the issues that have been brought up, starting with...

Media Consolidation: For the past few years, Disney, Warner Bros., and Universal have been competing to be the biggest movie studio in the world and this merger gives Disney a clear advantage in that regard. Having one studio clearly at the top is troubling, but I’ve heard some people go so far as to say the new Disney is a monopoly. If Disney is a monopoly after this merger, then they were practically a monopoly last year as well. The same could be said about Warner Bros., which hasn’t missed the top three in the domestic box office in over a decade. You could make a similar case for Universal as well, although they haven’t as consistent as Warner Bros. has been in the past several years, but they are much more troubling when you consider what their parent company owns. More on that down below.

Here’s the important thing to remember when it comes to media consolidation. The overall diversity is actually better than it has been in a long time. Netflix is huge. The company is going to spend $16 million on programming next year, including a lot of original programming. Hulu is only about one tenth the size of Netflix, but that still makes it larger than some of the mini-majors. Amazon Prime is a massive streaming service and Amazon Studios is an award-winning studio. Lionsgate has beaten Paramount Pictures and / or Sony Pictures a couple of years in the past decade and arguably could take Fox’s place in the Big 6. A24 has had a lot of sustained success. Neon had a couple of million dollar hits in their first year of operation. Gunpowder and Sky’s first theatrical release earned more than $1 million. The rise of digital distribution to theaters and VOD has made it easier for independent studios to get their movies out to audiences. I think having more voices heard is a good thing and while we will have less studios competing for top spot at the box office week after week, the overall diversity is still good.

Market Saturation: Right now, there are 26 films scheduled to be released by Disney, Fox Studios, and Fox Searchlight 2018 and I heard some people say that this is too much for one studio to release. This is compared to the 8 films Disney released this year. At first glance, this is a huge increase for the studio, but you have to keep two things in mind. There is a good chance some of these movies will be pushed back; after all there are four weeks where there are now two Disney releases. We likely won’t see too many changes, because for a lot of films, it’s too late to really do anything (they have four films currently scheduled for March, for example) but I wouldn’t be surprised if that list got trimmed to a little more than 20 films. It is still huge jump for the studio, but not that large compared to other studios. Just last year, Universal released 22 films, while the year before that, Warner Bros. did the same. Additionally, if you go back a little more than a decade, Warner Bros. was releasing more than 26 films practically every single year. Furthermore, this is a one-time anomaly for Disney and in the coming years things will return to normal. For example, Fox had six Marvel movies planned for 2019 and beyond. It is very likely three of those films are dead. I don’t think market saturation will be a problem. On the other hand...

Layoffs: Whenever there is a merger like this, people lose their jobs. For example, I think Blue Sky Studios will be closed entirely. I just hope the job loses are minimal and other major studios, as well as the mini-majors and indie producers, can pick up the slack. There’s no way to spin this as a positive and one can only hope Disney et al try to minimize the negatives.

Corporate Bullying: Very recently, the Los Angeles Times wrote a story about Disney that Disney didn’t like. As a result, Disney barred critics from the Los Angeles Times from attending screenings for Disney movies. Or more accurately, movie. Originally, the ban was for Thor: Ragnarok, Coco, and The Last Jedi, but Disney quickly folded, because they learned when a newspaper writes, “We couldn’t review this a movie, because the studio barred us,” it looks a lot worse for the studio than it does for the newspaper. Then when critics stood united and disqualified Disney from any of their awards, Disney surrendered. Don’t get me wrong, what Disney did was the wrong thing to do, and the dumb thing to do and we have to be vigilante about this in the future, but I don’t think this merger will result further abuse.

Copyright Laws: I’m going to keep this one really short. Some people think their merger will increase the chances that the copyright length will be extended, again. This argument only makes sense if you think Fox was opposed to the last extension, or even just neutral. This is not the case. All major studios wanted the copyright length extended. The only way it is not extended again in the future, is if campaign finance laws are changed.

There are some downsides to the Disney acquisition of Fox Studios. There are some movies that would have been made had Fox remained a separate studio and there will be job losses as a result. However, we wouldn’t be talking about this merger if Disney hadn’t had been so successful at the box office the last few years, because Disney wouldn’t have been able to buy Fox Studios. Remember, they had the five biggest worldwide hits last year and all five earned stunning reviews. I am far less worried about this business deal than I am concerned about...

Net Neutrality: Remember when I talked about Universal’s parent company? It’s Comcast, which is an ISP. With the FCC voting to get rid of Net Neutrality, Comcast could block its users from going to the movie sites for other studios. They certainly can slow down the traffic to those sites so people won’t be able to watch the trailer. It might be a lot of bad publicity if they get caught, but I think this has the potential to be a much bigger issue than Disney buying Fox Studios will be.

Filed under: Analysis, Coco, Thor: Ragnarok, Star Wars Ep. VIII: The Last Jedi