American multinational mass media and entertainment conglomerate Walt Disney Company is all set to buy Rupert Murdoch's 21st Century Fox Inc. in an all-stock deal, pegged at $52.4 billion. The acquisition includes Fox's film and television studios, cable entertainment networks, and international TV divisions, along with a 39 percent stake in broadcaster Sky.
An official announcement on the Disney-Fox deal is likely to be made on Friday, December 15. But Fox owner did tell investors that the deal was the beginning of a new journey for the firm. "With today's announcement, we launch the next great leg of our journey," BBC quoted Murdoch as telling investors. "Are we retreating? Absolutely not."
While this may be "the next great leg" for both the firms, analysts believe that the deal could lead to a sizeable number of layoffs. It has been said that this deal could lead to hundreds of job cuts at Fox in the next few months as the firms have similar departments, which Disney would want to merge for cost-cutting.
"The layoffs will happen, in all likelihood," Gene Del Vecchio, a marketing professor and entertainment industry expert, told the Los Angeles Times. "They're apt to be large. When you combine Disney with Fox, you get tremendous synergy."
Even though nothing has been put in writing yet, Lachlan Murdoch, the co-chair of 21st Century Fox, has already hinted that such a move could be made in the future. Speaking of the employees and how the deal has been stressful for all, he said: "Sometimes the right decisions are the hardest ones."
In fact, Fox employees too have spoken about how they are unsure about their future and how this has caused quite some concern among the workers. "There are a lot of people who don't know anything, and that is creating great anxiety," a Fox employee told the LA Times.
Meanwhile, the job cuts may not be restricted to mid-level workers and the deal could see many senior-level employees bidding farewell to the firm. This could play out in two ways – one, the employees may be asked to leave or two, other firms may just grab the chance of poaching these senior managers while the details of the deal are being worked out and the company focuses on the transition.
Fox has wanted to sell a few parts of its business for a while now, as its senior management believes that the media landscape has changed over the years and there are different ways people consume information these days. With the sale, Fox intends to focus on just sports and news and it believes that these are the fields where the firm can efficiently compete.
Meanwhile, the plan also works perfectly for Disney as it gets access to Fox's wide consumer base especially in foreign markets such as the UK, Germany and Italy. Not just that Disney now has even landed the very popular X-Men and Avatar franchise.