A Disney and Fox merger?

I usually don’t comment on Hollywood politics, but the rumour that Disney tried to acquire some of Fox’s assets has put the internet in a state of, well, that:

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And I honestly have the feeling that most of the discussion is either totally overblown “Disney takes over the world” talk, or full of unrealistic expectations. So maybe it is time for a huge step back and examine the situation rationally.

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Just follow my reasoning step by step.

Let’s first talk about the assets in question, because some talk about this as if Disney intends to buy the whole of Fox. That isn’t quite correct. They are interested in the movie studios and in part of the Television division. To clarify, they are interested in the part which is not News (*cough* propaganda *cough*) or sport related, instead they have their eye on the entertainment side of things. And this is not about having another studio lot, this is about the IPs connected to the studios and the Fox TV productions.

 

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So why is Disney interested?

This is only conjuncture, but let’s consider this from Disney’s perspective: When Disney initially made the distribution deal with Netflix, I fully expected that the deal would end up in a merger. Even when they announced that they would go ahead and start their own streaming service in 2019, I still thought that this might be a negotiation tactic, pressuring Netflix to sell for a lower price by threatening the company with serious competition. After all, Netflix doesn’t just own a streaming service in the US, it is the only one so far which has taken serious steps to be a world-wide provider. But now it looks like Disney will go ahead with building up a Netflix rival at least for the US market. And in order to do that, there is something Disney needs above everything else: Content.

Yes, Disney has a huge library of movies and TV shows, both animated and live action (don’t forget that Disney doesn’t just own the Disney Animation Studios, Pixar, Lucasfilm and Marvel, but also Walt Disney Pictures, Touchstone Pictures, Disneynature and ABC, just to mention the most relevant ones). But at the end of the day, Disney is mostly known for family entertainment. A streaming service can’t succeed when it only appeals to one group, even if it is a particularly broad group. Disney needs more content for “grown ups”, and I am not necessarily talking about r-rated movies and TV shows, I am talking about genres which Disney only covers from time to time under its Touchstone label, like heavy drama, horror, dystopian science fiction aso. They also could use some classic movies. Disney is far from being one of the oldest studios out there and it started to produce live action movies fairly late.

Consequently there is a huge gap Disney has to fill, and the easiest and most substantial way to do it, is to acquire those rights through a huge buy-out. Under the other studios, there are two possible candidates for a buy-out like this, Sony and Fox, and while it seems like Sony is the easier option, due to the well-known financial troubles of the studio, Fox might actually be the better one. It has a larger and more diverse library which would match what Disney already owns perfectly, and it has some incentives to sell to a reasonable price.

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But why should Fox agree?

 

Fox is currently owned by Rupert Murdoch, who is well known for aggressive expansion. Selling anything seems to be counterintuitive. But it wouldn’t be the first time that Disney successfully brokered a deal, considering that it acquired what is now Freeform from Fox a few years ago.  In addition, there is currently a generation change going on in the Murdoch empire. The two sons are taking on more and more responsibilities, and their view on the future of the company might be somewhat different.

Let’s take a look at this aggressive expansion strategy: It has lead to Rupert Murdoch practically owning the British media and having considerable influence on public opinion in the US. I do wonder about the financial situation overall, though. Again, this is just conjuncture, but here are a few things one should consider: Murdoch trying to spread his influence over the European continent by buying Sky might have been a huge misstep. Sky is a pay-tv channel and was frankly a financial mess when Murdoch got his fingers on it. Then there are all the newspapers the company owns in the UK. I wonder how many of them are still creating a decent revenue now that more and more people are looking up the news on the internet. And finally there is Fox studios itself which overall hasn’t really done all that well in the last years either.

The Media is currently in a state of flux, due to the rise of the streaming services. The live viewing numbers for TV shows are constantly falling, because more and more people prefer to watch on their own time. The exceptions are sport events, news, live-shows, everything which looses relevance directly after airing. Soon every media company out there will have to decide if it wants to jump in with its own streaming service or if it wants to retool its programming accordingly. For Disney it makes totally sense to do the former, since it is a brand people recognize as a sign of quality. For the Murdoch group it might actually better to focus on its core business – which is the newsroom – and get rid of everything else. They have a vast library which would match Disney perfectly, but it is not vast enough that Fox could built a streaming service on it, the way Warner Bros, Disney or Universal could. Avoiding to the competition might be the better move, even if that means to give up some IPs which currently stand to make a lot of more money in the future. I say currently, because we have seen in the past how a studio can destroy an IP thoroughly (see Fantastic 4 as prime example). And Disney might actually do better than Fox with some of those IPs.

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Oh, which IP’s we are talking about?

 

That is the question. I’ll be frank here: rights issues at Fox are incredible complicated. With Disney it is usually fairly easy: Disney makes the movie, distributes said movie, gets the revenue and owns the rights to said movie. Sometimes there might be issues considering the property on which their movie is based, but since Disney has a tendency to go for either public domain properties or original stories, in most cases they are the sole owner of at the very least the particular incarnation of a character. There are some movies Disney released under their alternative labels which are co-productions, but as a thumb rule Disney is the owner of its own productions and distributes them worldwide. It took a few decades, but nowadays they are really good in keeping control over every aspect of their creations (sometimes too good – trying to trademark a foreign holiday was not cool, Disney).

With Fox it is a little bit more complicated. Take White Collar. White Collar is a television series which originally run on USA Network, which belongs to NBC. But it was produced by the Fox Television studios. Though they apparently don’t control any of the relevant rights. White Collar was syndicated in the US by Ion Media, while the distribution rights in other countries are an entirely different matter. I suspect in Germany, Disney has those rights, based on the channels on which White Collar was shown (currently Netflix and the Disney Channel).

Bottom line: regarding the TV shows, it is sometimes difficult to tell which ones are actually Fox properties, and even those which are might be caught up in some sort of distribution deal, which is lowering their worth for a prospective buyer. It is a little bit easier to figure out regarding the movies, but again, there are a number of co-productions or distribution only deals in the mix. In addition, Disney is already owning a number of Fox IP’s, acquired during the aforementioned deal to buy the Fox Family channel (which turned into ABC family which turned into Freeform). Which is the point at which I am pressing the alert bottom.

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DANGER! DANGER!

 

Remember Peter Pan and the Pirates? Nice little TV show you won’t see on DVD anytime soon, because it, along with a lot of other shows which originally run on Fox Family have vanished in the Disney vault. And of all those shows which ended up in there, it has the smallest chance to ever see the light of day again, because Disney has its own version of Peter Pan and wants it to be the ultimate one.

Naturally not all IP’s which were acquired back then ended up in the vault. The Power Rangers have found a home at Disney and the X-men, being a particular popular series, has gotten its dues, too. And, as I pointed out above, this is about having more content, so Disney starting its own streaming service might lead to some of those properties being pulled from the vault for additional content. But between all the assets Disney would purchase from Fox there might be IP’s Disney is simply not interested in or actually wants to bury because they are rivalling their favoured product.

And no matter what property, don’t expect a DVD set anytime soon. Disney doesn’t even manage to release their own productions properly, something has to be particularly successful for them to even consider that move. And even then you end up with some oddities. For example Disney released the first two season of The Tick on DVD, but from each season one episode is missing because Disney feared that the parodies in it would lead to them being sued by Marvel. The irony shouldn’t be lost on anyone.

Thus said, Disney is by far not the only company with a spotty record regarding the release of shows or a tendency to self-censorship. It might therefore be premature to sound the alarm. Having a all the rights which are relevant for one property under the control of one company has a number of advantages. To just mention the most obvious example (no, not Marvel): Fox owns the distribution rights to the first Star Wars movies. Disney purchasing those rights might lead to nifty collector boxes, maybe – just maybe – even containing the original version of the movies. The more rights Disney has, the more freedom the company has to use them.

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Disney is taking over the world!!!

 

Not quite. Disney would add to more of the media to its market share and this would certainly change the media landscape, but those changes are way more relevant on the TV than the movie side of things.

Oh, before someone brings up the story of Disney squeezing more and more money out of theatre owners: That is pretty much an unrelated matter. For one, this is nothing new, the smaller theatres in Germany have already stopped running the Disney blockbusters if they can help it. Just recently the German comedy movie Fack ju Göhte 3 placed on top of the German box office, ahead of Thor: Ragnarok. You can guess which movie the smaller theatres decided to run.

And two, what puts Disney into the position to raise the prizes is not the number of IPs they own, but the desire of the audience to see those movies. What they pull with the Star Wars or the Marvel movies would never work with a number of their lesser properties. Be assured though, that there is a breaking point in all this. After all theatre owners have to make their money somehow, meaning the ones who have to eventually pay for Disney’s additional revenue is the audience. In short, sooner or later the market will regulate itself. Or it won’t, but then it will be our own fault.

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So no reason to panic!

 

The truth is, even if Disney merged with Fox studios, it would still produce less movies every year than either Warner Bros. or Universal. In fact, Disney is pretty much the only studio small enough that it could buy Fox Studios without outright violating current anti-trust laws but also rich enough that it can afford the price-tag on a sale like this.

Television is another matter though. Not only would Disney double its presence, with those IPs Disney can easily run a streaming service containing only properties over which it has full ownership. Which is considerably cheaper than having to buy distribution rights. Netflix has started its own productions for exactly that reason, but it will take time to replace its library with them. Disney on the other hand can easily fill a streaming service with its properties, especially if it also has control over the Fox IPs. This would mean that Disney (and other studios which might follow) can easily undercut Netflix and perhaps even force it out of the market in the long run. After all, Netflix is known to have huge debts due to the various investments it made into infrastructure and TV-productions. In the end, this could be a bad thing if Netflix doesn’t manage to hold its ground, but also a good thing for the audience, because some healthy competition would have a positive impact on the fees and the effort made to produce compelling content.

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But what about those IP’s?

The biggest fear some people seem to have is that Disney takes over and then “ruin” franchises left and right with their family friendly approach. I honestly don’t get where this fear is coming from. We had those discussions in the past, when Disney took over Marvel and Lucasfilm. And what happened? Both companies thrived under Disney’s tutelage. Marvel Studios does better than ever since Disney removed it from the influence of Perlmutter, and Lucasfilm goes from one success to the next. Honestly, I never understood what Disney was supposed to ruin in terms of the Star Wars franchise anyway. After the Prequels, the Ewok movies, the Ewok animated series and the Star Wars Holyday special, there was nothing Disney could do to make it worse.

Precedence shows  that Disney is not in the habit of micromanaging its subsidiaries. Granted, a lot of Fox’s IPs are further removed from what Disney stands for than Marvel, Lucasfilm or Pixar. Especially the Alien Franchise, the Predator series and the whole McFarlan verse comes to mind. But remember what I said in the beginning about Disney’s motivations? This is about variety! Meaning that it isn’t actually in Disney’s interest to just ignore or sanitise the IPs in question.

In the end this is not a question of who owns what, it is a question of branding. All Disney has to do is to present the Fox properties in a way that clarifies to the audience that those are their own thing. Disney has done this in the past by releasing projects under the Touchstone label. Even the streaming service can be set up in a way that the general audience has a clear cut between the different Disney branches. The same way Netflix has a “Netflix originals” category in its streaming service, Disney could sort their movies not based on content, but based on brand.

And the same is true for the TV properties. The question is if Disney can set up an environment in which the creative minds can thrive and create even more content for their service under the Fox brand (or however it will be named under Disney). But again, this has rarely been Disney’s problem, unlike Fox they aren’t exactly known for excessive studio interference.

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What about the Marvel IP’s?

 

To all those who are either salivating or complaining about the prospect of Marvel studios getting the X-men and the Fantastic 4 rights back: Calm down. Keep in mind that even if this deal becomes reality, it won’t happen from one day to the other. It could take years to figure all this stuff out, and by this point the MCU might be at least in the midst of Phase 4 if not Phase 5, Deadpool will have had so many sequels that we might already be tired of the character and the X-men, well, who knows. Hell, there is a real possibility that the Fantastic 4 rights revert back before the merger happens.

On the other hand, this might be the perfect time to push the merger through because thanks to Trump anti-trust laws have never been as weak. Just to be on the safe side it would be better to act before a new administration cleans up house. So let’s assume that the deal happens within the next years. It stands to suspect that Disney would shuffle the Marvel rights over to Marvel studios. And I actually see only advantages in this.

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NO! This will be horrible!!!!!

 

Oh, I know the arguments against it: We will get less movies every year, Disney will never go r-rated, the X-men don’t fit into the MCU…. let’s take those apart.

For one, I take quality over quantity any day, and I think that the majority of the Marvel movies are vastly superior to the Fox output. Plus, Fox isn’t that fast in churning out those movies either. On average, they barely do one per year. They want to step their game up now, but who knows which projects will actually happen in the end. Plus, keeping the number of comic book movies per year reasonable will ensure that every project will get the attention from the audience it deserves.

Two, Disney has been gone R-rated in the past, as I pointed out above, this is more about the right branding than about what Disney would or wouldn’t do. In this case the question is more what Marvel Studios would do. And Marvel Studios has already gone R-rated with its TV shows. Now the question is if they would do it in the movies. A R-rated movies seems to be a terrible fit for the MCU but then, who says that everything Marvel studios does has to be part of it? As I said beforehand: All a question of branding.

Which brings me to the last point, that the X-men are a bad fit for the MCU. I agree. Marvel kind of got away with it in the Comics, but I don’t think that it will work in the MCU. Comic book continuity has always been fluid, but the MCU is way more beholden to what came beforehand. Putting a society in which Mutants are systematically hunted in the same setting in which the Avengers are considered heroes just doesn’t jive. Even if the MCU starts the franchise with a clean slate – as it should, the X-men are overdue for a reboot anyway – the Mutants are one element which are better off out of the MCU. But that doesn’t mean that Marvel Studios can’t run a second Franchise parallel to the MCU.

Hell, they could even make it a proper parallel world from the get go, starting with the premise “What if the Kree had never played around with human DNA, but instead the Mutants developed down the line, and the world feared those strange powers?” Think about it, Hydra would have never been created, Captain America or the Hulk would have never been a thing because nobody would play around with a supersoldier serum when there are already powered people one could draft running around. Thor might have never been send to Earth because Odin wouldn’t want to put him seriously at risk in such a hostile environment. And once this universe is properly established, they could do a dimension hopping crossover event. Or they could just leave the whole X-men verse as its own thing, with the difference that Marvel, unlike Fox, would actually make X-men movies instead of action movies which happen to feature mutants.

Plus, there are the Fantastic 4 and all the other properties involved. I think most fans agree that Marvel really should get those rights back. Above all, though, they will soon be desperately needed. Let’s look at the MCU again. The current line-up will mostly bow out with Infinity war. Which leaves Ant-man, the Wasp, Doctor Strange and Captain Marvel as the core of the next generation (just counting the characters which can headline a movie for sure). And then?

Well, Marvel can switch things a little bit up, for example by letting Bucky take over the mantle of Captain America, or by doing a team up movie involving supporting characters. They might finally do this Black Widow movie.  But they also need to introduce new characters, and in this area, they are slowly running out of options. There is Namor, provided that the Disney lawyers have managed to free him from legal limbo.  There is Blade, but I don’t see him fitting into the MCU at this point, especially not into the movies. There are various legacy and young characters, like Miss Marvel, Amadeus Cho aso which could build a version of the Young Avengers. And then there are some second tier characters and teams which might work the same way Guardians of the Galaxy did. But a lot of those are currently in the area of overlapping rights. Especially the whole British Pantheon of Marvel is fairly tightly connected to the X-men, and I have honestly no idea who is currently owning the rights to the Savage Lands.

Even if the MCU finishes eventually, Marvel can still really use those rights. Remember, this is a studio which exist for one reason alone, to produce comic book movies. They could branch out, I guess, but their safest option is a steady supply of new properties.

At the end of the day this is neither are reason to go all:

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Nor a reason to be all:

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Whatever will happen, won’t happen anytime soon, and the consequences will be partly good and partly bad – depending how much you care about Star Wars or Fox’s take on Marvel properties or any other IP. In the end we can just wait and see.

 

 

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