What Does The Disney-Fox Merger Mean For The Industry And Individual Consumers?
The Potential Disney-Fox Merger Continues The Worrying Trend Of Media Consolidation
Mergers and acquisitions are commonplace among large corporations, often occurring in a bid to stay relevant and increase profit margins while satisfying the ever-changing consumer trends.
The recently proposed US$52.4 billion acquisition of 21st Century Fox by Disney that would merge the first and third largest film companies in the world, is likely to send shockwaves across the entire media industry.
While it is hard to believe that a corporation like Disney could get any bigger, the Mouse House’s library of blockbuster hits looks set to become a whole lot bigger. Under this new deal, Marvel Studios, Lucasfilm, Pixar, Searchlight, 20th Century Fox and Big Sky would all be subsumed under the same umbrella. This would raise Disney’s market share of the domestic box office up to almost 40%, according to Business Insider.
Disney expects the regulatory review of the acquisition to be approved and to close within 12 to 18 months. However, the deal that would involve a horizontal merger of two major competitors in the film and TV production industry is likely to face significant hurdles and resistance from antitrust regulators.
A Consolidation Frenzy Could Hurt Consumers
Traditionally, the biggest concern for antitrust regulators has been that large companies have the power to set high prices at the expense of consumers. Beyond this, economists have also emphasized other major downsides of modern monopolies on the economy. Several of the country’s major economic issues —including stagnating wages, low labour-force participation, a fall in business creation—may all be the outcome of rising market power, according to a 2017 paper by two economists, Jan De Loecker, of Princeton University, and Jan Eeckhout, of University College London.
This merger will give Disney even more bargaining power and bring a greater variety of new entertainment options to the consumer. However, one major drawback of this could potentially be even higher monthly cable or satellite TV bills, on top of the monthly online streaming service charges.
The Emergence Of A New Streaming Site That Could Upset The Status Quo
Nonetheless, Disney’s CEO Bob Iger believes that the consolidation of strong content production units and distribution channels would create more competition, particularly in the online streaming services market.
With plans to launch their own streaming service in the next two years and incrementally pull all its content from Netflix, the Disney-Fox merger would ostensibly give Disney an even more diverse and exclusive repertoire of titles to work with.
As Disney shifts its focus toward entering the race for streaming supremacy, consumers can expect Disney’s Pixar, the MCU, Marvel and Star Wars films to all be housed under this new site, along with all a handful of new original series that live in those universes.
No matter the outcome, Disney has become a powerhouse corporation of epic proportions and is likely to keep its hold over the American as well as international cultures. With the consolidation of the media industry imminent, a small handful of companies will control and dictate the type of messages and stories received by a large majority of the world.
As the deal would further shrink the dwindling number of voices controlling media channels today, it’s hard not to ponder over the implication of this trend toward media consolidation on the types and variety of information disseminated to current and future generations that in turn shape the way we make sense of the world.