Disney to buy Fox film, TV businesses for $52.4 b

Walt Disney Co on Thursday agreed to buy film, television and international businesses from Rupert Murdoch's Twenty-First Century Fox Inc for $52.4 billion in stock.

Fox assets that will be sold to Disney, include the Twentieth Century Fox movie and cable networks.

Disney will also assume about $13.7 billion of net debt of 21st Century Fox.

Disney Chief Executive Bob Iger, 66, will extend his tenure through the end of 2021 to oversee the integration of the Fox businesses. He has already postponed his retirement from Disney three times. In March, he said he was committed to leaving the company in July 2019.

New advantages in India

This deal would give the world's best-known entertainment company new advantages in India, such as cricket rights and local-language TV shows for the fast-growing media market.

Disney would be able to distribute its programming on Star India, operator of 69 TV channels in eight languages, as well as the popular Hotstar streaming service. Disney also would gain global rights to professional cricket.

"It is an amazing opportunity to get into the best developing market in the world," MoffettNathanson analyst Michael Nathanson said, "but it is highly competitive."

Netflix Inc has been offering its streaming service in India for nearly two years, and Amazon.com Inc's Prime Video has been courting customers there for one year.

Global expansion is important to Disney because its largest US network, ESPN, has been losing subscribers as audiences migrate from traditional television to digital viewing.

India represents the second-largest subscription TV market in Asia, with 154 million households in 2016, according to consultancy PricewaterhouseCoopers, which projected that number will grow to 167 million in 2021.

Mobile video traffic, meanwhile, is booming. KPMG expects it will grow at a compound annual growth rate of 68% between 2016 and 2021.

Star India is also flush with cash. Fox projects it will earn $500 million before interest, taxes, depreciation, and amortization in fiscal 2018, rising to $1 billion in 2020.

"Star India alone is by far the most successful TV network in the fastest-growing country," Macquarie Research analyst Tim Nollen said.

Star's TV business could bring in new advertising revenue at a time when US ad spending is growing at a slower pace. In the first fiscal quarter, Fox saw international ad revenue jump 10%, fueled by double-digit increases in growth through Star India, while in the US, the company saw 3% growth in ad revenue.

Disney networks including the Disney Channel are distributed now in India but overall the country is "an egregious area of under-exposure" for the company, B Riley FBR analyst Barton Crockett said in a research note.

Adding Star, which reaches 720 million viewers per month, would vastly expand Disney's TV presence there.