Change Is In The Air

by Mark Ehrenkranz

This Summer has proven to be very interesting when it comes to the business of show. Three significant moves have transpired which have a major impact on how and which movies we see. Comcast’s bid failed and The Walt Disney Company bought Fox for $71 billion. The Department of Justice is trying to block the sale of Warner to AT&T, and MoviePass suffers growing pains.

Here’s the new landscape for consumers. Disney already owns Pixar; Lucasfilm Ltd.; Industrial Light & Magic; Skywalker Sound; and Marvel Studios. The Fox purchase gives them Endemol Shine (American Idol); Shine TV (UK Production Company, The Biggest Loser); FX Networks; National Geographic Channels; and Fox Searchlight Pictures (Shape Of Water – 2018 Best Picture).

Representing 30%, Disney is already the king of the box office, and if the deal for most of 21st Century Fox goes through, it will add even more big-name franchises including Deadpool, the X-Men, and Avatar to its roster. The end result, a company with power unmatched by any other traditional movie maker.

This year’s box office sales show how formidable the new super-company could be. Thanks to Black Panther, Avengers: Infinity War, Incredibles 2 and Deadpool 2, Disney and Fox together control nearly half of the domestic market share so far in 2018.

Fox’s Deadpool 2

Anticipation is high for Disney’s own direct to consumer platform. It’s all part of Disney’s three-pronged attack on the status quo. The first pillar will be Disney’s soon-to-launch streaming service aimed at family-friendly content and should house all content from its Disney-branded, Pixar, Marvel and Lucasfilm properties.

On the movie side of things, Disney will have the opportunity to carry out Fox’s four planned Avatar sequels if they so choose, which represents a potentially massive broad appeal. The Alien film franchise is running out of steam but remains a high-profile title. Why not spin it off into its sci-fi horror streaming series for Hulu? How many hours of uninterrupted viewing can Disney generate with the back catalogs to their newly acquired hit shows such as Modern Family, Family Guy, Fargo, American Horror Story and more?

Before the Warner acquisition, AT&T basically owned DIRECTV. The Warner assets they acquire will be Time Warner Cable (now Spectrum); Warner Brothers; CNN; DC Comics; HBO; Cinemax; Turner Broadcasting International, Cartoon Network, Adult Swim, Hulu (10%) (in partnership with 21st Century Fox, Comcast, and The Walt Disney Company).

disney-pixar-incredibles-2
Disney Pixar’s Incredibles 2

The Department of Justice has not given up, and it’s still trying to block AT&T’s acquisition of Time Warner (now named Warner Media). The DOJ wants to overturn a judge’s earlier ruling that enabled telecom giant AT&T to take over the media conglomerate Time Warner, which owned HBO, CNN and Warner Bros. studios, among other properties.

This was a blow for the Justice Department’s antitrust division. The government’s arguments were swept aside by U.S. District Court Judge Richard Leon, who gave his blessing for the deal valued at $85 billion. Federal lawyers contended that the combined company would be too large and powerful, allowing it to run roughshod over other players in the entertainment and media world and to hike prices on consumers.

Comcast is unlikely to make another bid for Twenty-First Century Fox’s movie and television assets. Comcast was engaged in a bidding war with Disney over the Fox assets. Recently Disney threw some cash into its own bid, raising its offer to $71 billion and edging out Comcast’s bid of $65 billion in cash. Comcast has also been bidding for Britain’s Sky, which is 39 percent owned by Fox. Last week, Fox raised its bid for the remaining portion of Sky it doesn’t hold, with a new offer valuing the deal at $32.5 billion. Then Comcast raised its bid, valuing the company at $34 billion.

Comcast is focused on its bidding for Sky, the European British media, and telecommunications company headquartered in London. The government’s decision to appeal a recent court ruling allowing AT&T to go ahead with its purchase of Time Warner may be giving Comcast reason to pause in its pursuit of the Fox assets. The government had tried to block the AT&T deal on competitive grounds.

For the record, Comcast owns NBCUniversal Television Group; Universal Pictures; DreamWorks; Focus Features; DreamWorks Pictures; Amblin Entertainment; Working Title Films (Baby Driver, The Danish Girl); and Paramount Home Media Distribution Japan.

The final company this Summer is MoviePass, who appears to be on its last legs. They are taking a new approach to the “going out of business” sale by raising the price by 50%. As a last-ditch effort, they will actually raise the cost of its monthly service and eliminate ticketing access to many of the major Hollywood films that have been the cornerstone of the company’s attraction since the beginning. The cost goes $10 – $15

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