Finance & Investment, Uncategorized

The Walt Disney Take Over of Murdoch’s Fox for $52bn

By S A Faisal

The incessant emergence of new entrants and technology have resulted to a number of competition across multiple sectors which have consequently led to mergers and acquisitions in these sectors.

The Walt Disney agreed to buy the bulk of 21st Century Fox’s business for $52.4bn, in a deal both companies said position them to compete in the rapidly changing media industry. Rupert Murdoch who is the owner of Foxsince it has been on expansion for more than half a century believes that the transaction is a sharp shift that will result to forming news-focused company with its remaining assets. To him, he feels the break-up is necessary amid new threats from online advertising and competitors who are streaming entertainment into homes through the internet.

About the Purchase:

  • Purchase of Fox’s film and television studios
  • 39% stake in satellite broadcaster Sky

There would be a 25% stake for Fox shareholders, including the Murdochs in the larger Disney.

Disney will scoop up Fox’s studios, regional network and international holdings, among other investments. It is expected to add to Disney’s back catalogue high-grossing films as well as TV hits such as Modern Family and The Simpsons.

The purchase also extends Disney’s global reach, adding media company Star India and Fox’s interests in Sky plc and Tata Sky to its portfolio. It will also get majority control of the video streaming service Hulu, partially owned by Comcast and Time Warner. As for the debt, Disney will assume $13.7bn in Fox debt as part of the stock deal, taking the total value of the transaction to more than $66bn.

Benefits to Disney:

Disney believes that the deal will provide it with what it takes to compete, and expects to wring “at least” $2bn in cost-savings out of the new company boot.

Disney already owns a vast array of news, film and leisure companies, as such, the purchase will help it sustain and compete with technology companies like Amazon and Netflix in a quest to attract more customers to new ways of viewing.

Disney is investing heavily in online streaming platforms, as a way to counter a downturn in its pay-TV business and threats from these new rivals.

Fox at Post Purchase:

 There has been speculation that the deal was to create an opportunity to reunite Fox with the news business which were spun-off in 2013 following a scandal over phone tapping in the UK.

Fox intends to create a smaller firm focused on news and major live sports events in the US.

It will hold onto its flagship Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network.

INVESTMENT OPPORTUNITIES IN AFRICA

Africa is one of the rare continents with enormous resources yet to be untapped, statistics shows that about 60% of the world’s uncultivated land is in Africa, while it contributes only 10% of the world’s agricultural produce. A large proportion of it ever-increasing youth population majorly remains untapped potential in the region. In case of labour-intensive form of industrialization, Africa’s youthful population makes it more cost effective in doing business on the continent.

Notwithstanding, Africa is one of the most profitable continent to invest in due to it favorable Climate condition, Vast Natural Resources, Favorable Trade Policies which makes it easy and flexible for both local and foreign investors. For instance in Nigeria some of these include; Double taxation agreements, Investment promotion and protection agreement, ECOWAS Trade Liberalization Scheme, Commonwealth Tax Relief and many other Tax/Tariff/Sector Specific based incentives.

Lastly, African countries in a quest to increase revenue and improve economic productivity accelerate different programs to secure an attractive outlook for bringing in investors.

REFERENCES:

Available from: https://www.bbc.com/news/business-42353545 [Accessed 3rd                                                                    December 2018].

Available from: https://www.africa.com/where-to-invest-in-africa/ [Accessed 3rd                                                               December 2018].

Available from: https://www.africa.com/top-investment-opportunities-in-africa/ [Accessed 3rd December 2018].

Availablefrom: https://www.investopedia.com/articles/investing/100614/interested-investing-africa-heres-how.asp [Accessed 6th December 2018].

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