Disney's $71B Acquisition of 21st Century Fox
How Disney outbid Comcast to acquire Fox's entertainment assets in 2019.
In December 2017, Disney announced a $52.4B all-stock bid for 21st Century Fox's entertainment assets — film and TV studios, FX, National Geographic, regional sports networks, Hulu stake, and Star India.
Comcast counter-bid $65B in cash in June 2018. Disney returned with a $71.3B mixed cash-and-stock offer, which Fox shareholders approved.
Strategic rationale: Disney needed scale and content to launch Disney+ against Netflix. Adding Fox's IP (Avatar, X-Men, Simpsons) and the Hulu majority stake gave Disney the streaming flywheel it lacked.
Financial outcome: Disney took on ~$35B in incremental debt. Goodwill of ~$28B was created. The deal closed at ~15x Fox's EBITDA — a control premium of roughly 40% over Fox's unaffected share price.
Key Takeaways
- →Strategic deals can justify high multiples if the buyer needs scale to compete (Netflix).
- →Mixed cash/stock structure shares risk and reward.
- →Goodwill creation is a tell for premium paid.