If I Were Disney CEO Part 30 - 20th Century Fox

"Combining the 21CF businesses with Disney and establishing new 'Fox' will unlock significant value for our shareholders.  We are grateful to our shareholders for approving this transaction.  I want to thank all of our executives and colleagues for their enormous contributions in building 21st Century Fox over the past decades.  With their help, we expect the enlarged Disney and new 'Fox' companies will be pre-eminent in the entertainment and media industries."

Rupert Murdoch, Executive Chairman, 21st Century Fox

"We're incredibly pleased that shareholders of both companies have granted approval for us to move forward, and are confident in our ability to create significant long-term value through this acquisition of Fox's premier assets.  We remain grateful to Rupert Murdoch and to the rest of the 21st Century Fox board for entrusting us with the future of these extraordinary businesses, and look forward to welcoming 21st Century Fox's stellar talent to Disney and ultimately integrating our businesses to provide consumers around the world with more appealing content and entertainment options."

Robert Iger, Chairman and Chief Executive Officer, The Walt Disney Company

Disney's most recent acquisition is 20th Century Fox.  Still working its way through approvals, the acquisition looks to be completed early next year.  In this acquisition, Disney has obtained a compelling film library dating back to the earliest parts of the 20th century and including full rights to many other properties Disney already owned.  The greatest challenge is to determine what 20th Century Fox adds to the Disney studio organization beyond simply providing a home for R rated releases.

The goals for 20th Century Fox, then, center on creating a unique identity and purpose within the Disney organization.

Primary Goals for the Division:

• Move X-men and Fantastic Four related films to Marvel Studios - This will undoubtedly be part of the goal of the acquisition, but it should be stated.  X-men and Fantastic Four related films should be moved under the Marvel Studios banner.  This will require a slight reboot of the films, but that should not be a huge hurdle.  The Fantastic Four films would surely welcome it and they would make the perfect addition to MCU Phase 4.  X-men films will be the ones hurt most by a reboot, but there are various options there.  However they proceed, Ryan Reynolds can remain as Deadpool.  It would make sense that he would be able to recall a massive reboot, with his meta-awareness.
• Ignore the impulse to put the Fox fanfare back on Star Wars films - The other film series put back together with the Fox acquisition is Star Wars.  This gives Disney full access to all of the Star Wars films and could tempt some to put the 20th Century Fox opening and fanfare back at the beginning of the films.  I would resist this impulse and take the opportunity to fully cement the Lucasfilm brand, as discussed in the previous entry in this series.
• Identify the franchises for continuation and development - Beyond the Marvel related and Star Wars films, 20th Century Fox has a deep library with a few franchises that are worth continuing to explore.  Alien, Predator, Planet of the Apes, Avatar, and Kingsman are a few series that merit further exploration and further development.  Though these would be the exception to the key focus of the studio, there is worth to be gained through these properties.
• Embrace the R rating, but don't cater solely to it - The obvious fit for 20th Century Fox in the Disney family is to handle the films that are less than family friendly.  To house the R-rated pictures.  While this is an important niche and can mean the true end of the Hollywood Pictures, Buena Vista Motion Pictures, Miramax, Dimension Films, and Touchstone Films labels as necessary for that purpose, the 20th Century Fox film slate should not solely be composed of harder/R-rated films.  To do so would ignore the rich history of the studio and would prohibit recent successes like The Greatest Showman.  Like any other tool, the rating becomes an available resource, not a crutch.
• Identify directors for continued investment and relationship - The new post-acquisition 20th Century will be the perfect home for director driven films.  The other studios in the Disney family are either studio driven (Disney animation and live action, PIXAR, Muppets/Henson) or series driven (Marvel and Lucasfilm).  20th Century becomes a great home for standalone, director driven, auteur films.  For unique and offbeat pictures.  To that end, it would behoove the company to identify a list of directors they would like to work with on any of their projects.  Off the top of my head, I would be pushing for James Cameron, Wes Anderson, Tim Burton, Matthew Vaughn, Ridley Scott, Joe Wright, Edgar Wright, Guillermo del Toro, Patty Jenkins, and Quentin Tarantino.  If Steven Spielberg and Christopher Nolan were not so entrenched at Universal and Warner Brothers, respectively, I'd add them to the list.
• Mine the Black List for script potential - The Black List refers to an annual list of most liked screenplays that are not yet produced.   It would provide a great blueprint for intriguing films for a 20th Century film slate.  Beyond the ideas the directors above would bring themselves, this could provide another source of inspiration and direction. 
• Divest Blue Sky Animation - 20th Century Fox never had a great theatrical animation studio associated with it.  In the 1990s with the Disney Renaissance, 20th Century Fox had created Fox Family Films which became 20th Century Animation.  Today, Fox owns Blue Sky Animation for its animated film division.  Blue Sky is responsible for the Ice Age and Rio franchises as well as Robots, The Peanuts Movie, and the recent Ferdinand.  While Ice Age remains a lucrative animation franchise financially, Blue Sky represents the largest redundancy in the acquisition.  Disney has a plethora of animation resources currently and should divest Blue Sky Animation, while keeping the Ice Age film rights.  This would allow Disney potentially to develop further Ice Age films, while allowing Blue Sky to be sold to a film studio that needs animation resources.
• Distinguish 20th Century Fox and Searchlight - Of the Fox Studios, I would keep 20th Century and Searchlight.  Both have a certain brand cache associated with the names and a history and legacy worth preserving.  The issue would be distinguishing between the two.  Currently, Searchlight represents the independent, art-house, and foreign film division, while 20th Century represents the more mainstream, full-release division.  This division seems to work, though I would characterize it more as a plot-driven versus character-driven distinction.  Smaller, more-intimate character-driven films would seem to fit better with Searchlight, whereas the larger, plot-driven tentpoles would belong to 20th Century.
• Maintain the 20th Century name (not 21st Century) - I would keep the 20th Century Films name.  Perhaps it is just nostalgia, but 21st Century Fox just does not seem to have the same resonance.  I would seek to distinguish the studio from the New Fox that will be spinning out as an ongoing entity.  Were Disney acquiring all of the company this would not be as big of an issue, but since New Fox will exist with the broadcast television network, the sports network, and the news division, I am concerned about brand confusion between Disney's Fox studios and New Fox.  As a solution, I would propose reviving an old identity - 20th Century Pictures.  An indpendent film company in the 1930s that merged with Fox film, 20th Century Pictures would still have the familiar ring without the Fox connection.  Similarly Fox Searchlight Pictures could become simply Searchlight Pictures.  The logos still work, the fanfare still works, but the connection to Fox is removed.

Since this film studio would be more director and producer driven with a focus on unique, standalone film offerings, I do not have a suggested initial film slate for the studio.  Instead, I would simply look forward to the various ideas and unique stories that the directors would want to tell.  I would hope to creation a variation of the old studio-system within 20th Century, seeking to keep directors under this umbrella, looking to produce and release all film ideas that they have.  An exclusivity provision, if not a true studio system.

--------------------

As always, thank you for sticking with this series.  The next entry in the series is a new use for ESPN Films.

Disney News Mitchellany

In lieu of other national news, there are a couple of Disney news items that caught my attention and that I wanted to share.

First, Disney revealed its corporate media structure plans for post-20th Century Fox acquisition.  What's interesting about the new structure is how it reveals the primary reasons for the acquisition: content and streaming.  This new plan reveals an unprecedented growth in executive titles at the Walt Disney Company.  Disney will place current 21st Century Fox president, chairman, and CEO of Fox Networks Group Peter Rice as Chairman of Walt Disney Television and Co-Chair of Disney Media Networks, reporting directly to Bob Iger.  The new organization under him will include chairmen for Disney Television Studios and ABC Entertainment, FX Networks and FX Productions, National Geographic Partners, Disney Channels Worldwide, and ABC News.  From this we see the content domains, particularly for television that Disney is interested in:  traditional Disney and ABC programming, more adult programming on FX, National Geographic for brand recognition and association, and ABC news programming. From a streaming component, with the acquisition, Disney will have 60% control of Hulu, it's streaming sports platform ESPN+ has passed 1 million subscribers, and more and more information keeps coming out regarding "Disney Play," the likely name of Disney's branded streaming service.  With Disney clearly defining its domains and brands, it becoming clearer how they are going to segment their offerings in light of the acquisition.  Interesting times.  And with Fox ready to close the deal January 1, 2019, we are quickly proceeding to that new world.

Second, Disney has announced that its fourth planned luxury hotel at the Disneyland Resort has been canceled.  This one is interesting because of the local politics at play.  Disney had originally planned and announced an "Eastern Gateway" project which would include a luxury four diamond hotel just west of Disneyland proper in a current parking lot, giant parking garage to capture traffic coming in from the south (a compliment to the exiting parking garage for traffic from the north), relocated security closer to the parking garage, and a pedestrian bridge over Harbor Blvd on the Eastern boundary of Disneyland.  This announcement displeased the many hotels and businesses that had cropped up along the Eastern border, as it would have cut off their quick access to Disneyland.  After raising complaints to a city council that had become more hostile to Disney's expansion, Disney quietly shelved the Eastern Gateway. 

From there, Disney announced plans to renovate Downtown Disney on the west side, shuffling around hotel plans to allow them to build an additional parking garage on the west side, as well as a luxury four diamond hotel now in the remodeled Downtown Disney area.  The luxury hotel was a key component of both plans, as it enabled the company to qualify for a city tax rebate.  Disney went forward with closing several stores and restaurants in Downtown Disney to prepare including an AMC theater, Rainforest Cafe, ESPN Zone, Starbucks, and Earl of Sandwich. 

Disney then ran into two problems:   first, it discovered buried gas pumps that had not been properly disposed of in the proposed site for the new hotel (from the old Richfield service station), and two, the city somehow recognized late in the game that the location of the new hotel had shifted, leading to the city declaring the new hotel was not eligible for the tax rebate.   A combined wrinkle arose with a proposal on the Anaheim city ballot for November that would raise the minimum wage to $18 for business that have accepted a "city subsidy."  Under the argument, the tax rebate would constitute a city subsidy.  This put the construction on hold.  Disney found itself as an interesting position then to proceed without the tax rebate and build a hotel anyway, to guarantee it would not be under the higher minimum wage if passed, or to do whatever was necessary to have the hotel be in compliance, even if it was just a check-in at the old address.  Everyone expected Disney to wait until November to announce its plans either way.

Disney defied convention in two ways.  First it asked the city of Anaheim to drop its theme-park tax incentives, ending any question of whether they would be under the higher minimum wage requirement if it passed.  Second, Disney has now announced that the new hotel has been canceled.  This puts Downtown Disney in a very awkward state.  They were able to rush Earl of Sandwich back open at least temporarily, but there is now a large vacant section Disney is lining with food trucks and a stage.  They still have the Richfield pumps that need to be addressed, requiring demolition of at least part of the theater.N  The one upside is that it has allowed the addition of an elevated pedestrian walkway from the new parking garage under construction to Downtown Disney. 

The current speculation is that the new relationship with Anaheim will likely lead to a re-development of the Eastern Gateway plans after the November elections.  The hotel/new resort complex may be moving to Garden Grove, depending on the election.

All in all, lots of interesting changes for what will likely be soon the largest entertainment company in the world.

Developing.

Disney's New Century

We'll it is official.  Both boards have approved the acquisition, just a month after the Justice Department approved the merger with certain caveats.

It looks like The Walt Disney Company will be able to acquire 21st Century Fox with limited hurdles.  This makes Disney the largest of the remaining Big 5 film studios.  Think about it.  This gives Disney seven of the top ten highest grossing films and twelve of the top twenty.  Twenty-five of the top fifty.  That's amazing.  One company accounts for half, the other studios combined share the other half.

There will be a few points that will be key to watch over the coming months:

• Will Disney secure the approval for the acquisitions for the remaining international governments or will there be any that try to hold up this deal?
• Will Disney go forward with Fox's planned acquisition of SKY International?
• Will Comcast succeed in its acquisition of SKY instead?
• Will Disney and Comcast reach some sort of agreement regarding SKY?  If so, what will be the cost?  Will Comcast trade its portion of Hulu, Marvel theme park rights in Florida and Japan, and/or its film rights to the Hulk and Namor for SKY?  It sounds crazy, but Disney traded Al Michaels for Oswald the Lucky Rabbit.  
• Would Disney likewise throw in the Regional Sports Networks it must divest and/or the Simpsons?
• What becomes of New Fox with Fox News, Fox Business, Fox Sports, and the Fox Broadcasting Network?
• Will Disney re-brand 21st Century Fox to minimize the association with the New Fox?  21st Century Films or 21st Century Pictures, perhaps?
• Will Disney keep Blue Sky Animation or sell it as being a redundant acquisition?
• Who will ultimately get the regional sports networks?
• If Disney does not trade (or sell) Hulu, how will it interact with Disney's own planned streaming service?

Very, very interesting.  

Developing...

20th Century Disney

With Deadpool 2 coming out this weekend, my thoughts have turned to the still pending acquisition of 20th Century Fox by the Walt Disney Company.  It boggles the mind to think that in a couple of years, a Deadpool film could be a technically Disney film.

With that in mind, I wanted to record a few random thoughts on the upcoming merger:

• If this is for content for their upcoming streaming service, Disney really is buying the best of the remaining film libraries.  Of the classic big five studios (Warner Bros., 20th Century Fox, MGM, RKO, and Paramount), the 20th Century Fox film library is really the only one that Disney could acquire.  Warner Brothers, through Turner/Time Warner, controls the Warner Bros., classic MGM, and RKO libraries, and would be unlikely to sell to Disney.  Paramount with its connection to CBS is in a similar position.  Likewise the mini-major Universal would never sell to Disney.  They, through Comcast, are Disney's greatest competitor for the 20th Century Fox library.

• Fox seems also to be a good fit as it was one of the majors that did not have its own animation studio at the time.

• Disney will be getting a heck of a film library.   Shirley Temple, Charlie Chan, Rodgers and Hammerstein, the Three Stooges, and Marilyn Monroe.  Alien, The French Connection, The Day the Earth Stood Still, M*A*S*H, Miracle on 34th Street.  Planet of the Apes.  In addition to getting all rights to Star Wars and the remaining Marvel films.  This plus all of the Disney, Pixar, Lucasfilm, and Marvel materials.

• Hopefully, given the back catalog, the streaming service better dig deep and not just be the modern films.

• Additionally, this gives enough material for a Disney Classic television station.

• It really makes me upset that the Great Movie Ride is being replaced by Mickey's Runaway Railway.  I would love to see the Mickey ride added in a different location, but the Great Movie Ride could become something really amazing just focusing on Disney owned assets.  Could you imagine? Leave in Alien, Raiders of the Lost Ark,  and Fantasia. Add in Sound of Music (or any of the Rodgers and Hammerstein films), The French Connection, Young Frankenstein, Planet of the Apes, Cleopatra, The Robe, The Seven Year Itch, The Day the Earth Stood Still, and M*A*S*H.   Replace the Wizard of Oz section with an extensive Mary Poppins segment.

• Further, it's a shame that the Streets of America are gone from Disney Hollywood Studios, as the New York Street could have an amazing Miracle on 34th Street overlay at Christmas.

• And that was just film; Disney now owns an incredible television library. The Many Loves of Dobie Gillis, Daniel Boone, M*A*S*H, LA Law, Buffy, Angel, Firefly, Alien Nation.  Futurama.  The Simpsons.  I'm determined to get a Firefly attraction of the ground now.

• Adventures by Disney better include a 20th Century Fox Studio tour in the Southern California trip.  I would love to have a combined Muppets, Disney, Pixar, 20th Century Fox studio tour itinerary. 

• Anastasia is now a Disney princess (after years of being mistaken for one).

• I am very excited to have almost all of Marvel under one roof finally.  Just need to get Spider-man away from Sony, though I am at least glad they have worked out an arrangement.

• National Geographic will be a valuable asset, especially for Animal Kingdom.  It's a natural fit, especially given Walt's interest in true life adventures.  Will be interesting to see how they pair it with Disneynature.

• Glad they will be splitting out Fox News and the Fox Sports (beyond the Regional Sports Networks).  No need to have more redundancy than needed and this should help the FTC review.
• Though it will be years before this could impact the parks, it is exciting to get nearly all of the attractions in the park under the larger Disney umbrella (the only oddball now is the Twilight Zone Tower of Terror).  After the Lucasfilm purchase, Avatar was the other major licensed property.

• Beyond Avatar, it will be interesting to see what else might make it into the parks.  Planet of the Apes?  Maybe bits of The Greatest Showman?  I doubt we'll see anything Alien or Predator.