Why James Murdoch could be angling for a top job at Disney

Meg James and Ryan Faughnder, Los Angeles Times on

Published in Business News

Additionally, Disney would gain control of another promising asset, Hulu, boosting its ownership in the popular streaming service from 30 percent to 60 percent.

Fox plans to retain some of its assets, including Fox News Channel, the Fox broadcast network and Fox Sports. However, Fox would sell its 20th Century Fox movie studio, television studio, cable channels including FX and National Geographic, and its international holdings, which include a stake in the European pay-TV service Sky and operations in India and Latin America. Among the American media companies, the Murdochs have been most aggressive in building international assets.

A Disney deal also could provide a path for Rupert Murdoch to accomplish another longtime goal, according to a former Fox executive who declined to be identified discussing the situation.

"They will try to get enough cash out of the deal so that Rupert can take the remaining (Fox) assets, combine them with News Corp., and then take News Corp. private," this person said.

News Corp. is the second company that Rupert Murdoch controls and it includes the family's stable of newspapers, including the Wall Street Journal, New York Post and the Times of London. Folding Fox News Channel, Fox Business Network, the Fox broadcast network and Fox Sports into News Corp. would create a more tightly focused news and sports entertainment company.

What's more, a marriage of Disney and Fox might not face the same resistance from regulators as other potential tie-ups. The U.S. Justice Department has sued to block AT&T's proposed takeover of Time Warner Inc., which owns HBO, CNN and the Warner Bros. studio.

Philadelphia cable TV and Internet giant Comcast Corp., which owns NBCUniversal, also has expressed interest in buying the Fox assets, according to knowledgeable people, but Comcast appears to be on the sidelines as talks between Disney and Fox accelerate.

A Comcast-Fox deal would resemble the AT&T-Time Warner merger because both Comcast and AT&T provide internet service, which has invited additional regulatory scrutiny. For example, the Justice Department was prepared to block Comcast's proposed merger with Time Warner Cable -- but Comcast withdrew its bid in 2015.


Disney has the market clout to make a deal happen, with a market valuation of $162 billion, compared with Fox's roughly $61-billion market capitalization, according to data compiled by FactSet.

James Murdoch, chief executive of 21st Century Fox, was coy Tuesday during an appearance at the UBS 45th Annual Global Media and Communications conference when asked about "the elephant in the room." But he offered a subtle clue why he and his family might soon relinquish much of their entertainment empire.

"It really is about value -- about long term value," Murdoch said. "To the extent that we change our business ... we always are going to look at what creates the most value for our shareholders."

Disney shares fell $3, or about 3 percent, to $107.22 on Tuesday. Shares of 21st Century Fox declined less than 1 percent to $32.99.

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