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Raghav Mutneja
3211 : Final take-home exam

Summary of media event:

The media event I have picked for this exam is one that has just happened last week, i.e.

the acquisition of 21st Century Fox by Disney. Now, Disney is a media giant that we are all

familiar with today, but what most people do not know is that Disney is not just associated with

its signature characters of Mickey Mouse, but it is way larger than we can imagine. Besides its

famous Walt Disney Inc, Disney owns the ABC Network, the biggest sports network ESPN, and

one of the biggest Superhero movie company – Marvel Entertainment (Carpenter). And now,

let’s what Fox has to offer to Disney – Fox happens to be one of the “Big Six” Hollywood

Studios, it also owns the Star Wars series which just became the second highest earning movie of

all time in the US. Besides this, it also has rights to the remaining Marvels network, the X-Men

Series, the Avatar movie of which two more sequels are all set to come out soon, and of course

the all-time famous “The Simsons” (VanDerWerff). The Fox Network is spread across the

television ranging from shows across all TV genres – may it be sports, sitcoms, reality TV or

news. This $52.4 billion acquisition puts it right on top amongst one of the biggest acquisitions

in the media industry and “…will have countless far-reaching implications for the media and

entertainment industries.” (Sarkar) The concepts/theories that I am going to be discussing about

in this exam are – digital oligopoly, horizontal and vertical integration, competition and practices

of remix.

1. Digital Oligopoly

As McChesney in his article writes how the media landscape has changed over time, and

how the majority of power and control today lies in the hands of a few big players like Disney,
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Time Warner or Fox. This concentration of power in a few hands is what a digital oligopoly is

where these three to four companies own a large share of all the media being produced. Coming

back to this acquisition, one would wonder why would Fox want to sell out a large part of its

divisions to Disney and become smaller, but the numbers tell the true story. In the past couple of

years Fox’s stock price has been constantly dropped and so has “…its ability to compete with

Disney.” (Zeitchik) So instead of trying to revive it, Fox can now invest its efforts on its

broadcast network and free itself from the burden of the rest. This acquisition gives Disney a

whole range of age groups to target now in the audience, not that it didn’t have a lot already, but

getting complete rights to series like X-Men and Deadpool, it clearly gives Disney a big chunk of

the consumers from Fox, and thus its able to gain more ‘eyeballs’ as they call it in the media

industry. Also, as mentioned in the introduction and also in the article by McChesney, there are

only six conglomerates that run the media industry and Fox and Disney both happen to be part of

the six. Now if we remove Fox from that list and hand over its percentage to Disney, that

increases Disney’s control of the industry from 16.5 percent previously to a whopping 32 percent

now after the acquisition, which puts it way ahead of all its rivals.

2. Horizontal and Vertical Integration

Horizontal integration is defined as a situation “…where a handful of firms tried to

control as much production in their particular fields as possible.” (McChesney) And vertical

integration is when a Media Company owns different businesses in the same chain of production

and distribution, which in this case happens in multiple layers actually. I say multiple layers

because Disney on its own is a big player in the whole vertical integration process and so is their

newly acquired Fox Network. Both these giant companies own a lot of sub-brands as mentioned
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earlier, and each has its own brand value and marketing strategies and audiences, all of which

now goes to one parent company of course, that is, Disney. So, Disney has the same

phenomenon happening for them at different levels now. According to McChesney, “The point is

to capitalize on the potential for growth abroad…” (McChesney) As the years have passed, their

brands such as The Avengers, or just regular Superheroes like Spiderman or Deadpool have

gained a large audience not in the US, but around the world. Today these products are marketed

more aggressively in the foreign markets and a large part of the revenues are generated from all

parts of the world other than the US. These steps have led major media companies to dominate

not just in the US, but to become global players. According to other company owners as well, the

success of these products lies in the offshore success. For instance, last year the latest Avenger

movie, for promotional purposes was released in India a week prior to its release in the US. Steps

like these clearly indicate what these companies are trying to achieve and the markets they are

targeting for the future.

3. Competition

In today’s media world, there is competition at every level, right from creating material

down to the distribution, marketing and streaming services. These oligopolistic trends can be

easily spotted across all segments just as the media conglomerates. For instance, when it comes

to the online streaming services, Netflix is pretty much what comes to mind first, followed by

Hulu (which is owned by Fox too), Xfinity, Amazon Prime and so on. According to experts “…

this deal would give Disney a footprint in Asia, a footprint in India with Star, with Sky in

Britain” (CNBC) This deal basically puts Netflix at risk because this deal gives Disney a lot

more power is this streaming services sector. The reason Netflix has expanded recently is due to
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its International expansion, and now with Disney making its move, the fear is “what if Netflix

ends up being the AOL of streaming services.” (CNBC) Because just like AOL revolutionize a

new way to email and communicate but eventually died away due to the competition it got from

Yahoo and Google, and now even Yahoo has disappeared from that segment. Similarly, what

this means for Netflix is that they will need to watch out for Disney’s next steps in this sector

and try to prevent from Disney gaining more than just an oligopoly, but more like a monopoly in

the streaming services space. Another point scholars are also thinking about is the impact it’ll

have on services like YouTube, where we have a lot of new individual content, or how is

Facebook going to play a key role being a big social media giant in the scenario. If it is about

competition, and with Net Neutrality now having been repealed, will Facebook be biased in

promoting Disney owned services in the coming future? Also, since Disney is already in process

of launching its own streaming service soon, what implications will that have now, are yet to be

determined.

4. Practices of Remix

Practices of remix basically means when it is common practice to sample from, reference,

and build upon previous works in the creation of a new one. Disney movies are ones a lot of

critics call evergreen movies which have been extremely successful in their time, and since the

storyline is so good, that it can be easily molded a little to be made it into somewhat ‘new-ish’,

and released, just as a strategy to minimize risk and maximize profits. This year alone Disney has

announced nineteen live-movie adaptations of its animated films, the list of which includes

movies like Aladdin, Maleficent, Cinderella, Sleeping Beauty and so on. These are movies which

have story lines that all of us have come across as kids, and once they are made into live action
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movies, then they become a product for not just kids but for the entire family. (Devoe) A clear

example of this is evident from the recent success of Disney’s remake of ‘Beauty and The Beast’

which became one of the highest Box office earning film in 2017. Or we can look at the movie

‘Maleficent’ which was a new take on the famous fairy tale of ‘The Sleeping Beauty’, and

Disney went so far to cast big stars in the movies such as Emma Watson in Beauty and the Beast

and Angelina Jolie in Maleficent. These few tweaks keep the plot points intact, and at the same

time give the movie a whole fresh new look. How does this deal help Disney in this context?

Well, Fox does own a lot of stuff which has been successful in the past, but hasn’t been remade

or remixed in any way, so this opens up a whole new treasure chest for Disney to play around

with. Also, Disney does not intend to stop just there but they are planning to launch sequels to

these successful movies too. (Stephen)

Conclusion

Looking at all the data it won’t be wrong to agree with the experts who are calling this deal one

that would change the entire media landscape in the coming years. It is indeed concentrating a lot

of power into hands of a few, which I believe can come as a boon or a bane to us only time will

tell. As of now, it’s a whole new array of opportunities for Disney, and a lot of speculations from

the scholars, and at the same time the other big conglomerates now have their work carved out

for them, because what seems likely now is that Disney is going to come down all guns blazing,

and I will not be surprised to see Disney rise exponentially in the coming years.
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Bibliography:

Carpenter, J. William. “Top 5 Companies Owned by Disney.” Investopedia, 5 Dec. 2017,

www.investopedia.com/articles/markets/102915/top-5-companies-owned-disney.asp.

CNBC, CNBC, 7 Nov. 2017, www.cnbc.com/video/2017/11/07/disney-fox-deal-and

competition-in-the-media-space.html.

Devoe, Noelle. “A Complete List of Every Disney Live-Action Remake We Know About So

Far.” Seventeen, Seventeen, 7 Oct. 2017, www.seventeen.com/celebrity/movies

tv/g2936/list-of-disney-live-action-remakes/.

McChesney, Robert W. “The New Global Media.” Rich Media, Poor Democracy, 11 Nov. 1999.

Sarkar, Samit. “Here are the films and TV shows Disney would get from Fox.” Polygon,

Polygon, 14 Dec. 2017, www.polygon.com/2017/12/14/16778224/disney-fox-deal

movies-tv-rights.

Stephen Parkhurst, Kirsten Acuna and Anjelica Oswald. “Disney is remaking 19 of its classic

cartoons as live-Action films - here they all are.” Business Insider, Business Insider, 17

Mar. 2017, www.businessinsider.com/all-the-animated-films-disney-is-remaking-2017-3.

VanDerWerff, Todd. “Disney acquiring Fox means big, scary things for film and TV.” Vox, Vox,

14 Dec. 2017, www.vox.com/culture/2017/12/14/16764472/disney-fox-deal-merger.

Zeitchik, Steven. “Why Disney and Fox held talks about combining forces.” The Washington

Post, WP Company, 6 Nov. 2017, www.washingtonpost.com/business/economy/why

disney-and-fox-held-talks-about-combining-forces/2017/11/06/51f36a6c-c346-11e7

aae0-cb18a8c29c65_story.html?utm_term=.cd9b3512d82a.