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Helena Vieira

February 3rd, 2018

The Murdoch-Disney buy-out: What consequences for British viewers?

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Estimated reading time: 5 minutes

Helena Vieira

February 3rd, 2018

The Murdoch-Disney buy-out: What consequences for British viewers?

0 comments

Estimated reading time: 5 minutes

In December 2017 it was confirmed that Rupert Murdoch is selling a substantial part of his 21st Century Fox media empire (including the 39 per cent of Sky that he already owns) to Disney. This raises some difficult questions both for the British Competition and Markets Authority (CMA) and for UK audiences. It is uncertain whether Murdoch’s Fox group will be allowed by the CMA to purchase the remaining 61 per cent of Sky and this remains the case even in the wake of the CMA’s provisional ruling against the take-over in January 2018. What does now seem certain is that the British Sky satellite services will in future be owned partially or wholly by Disney. It will be down to the US competition authorities to decide whether Disney’s related acquisitions in the US are anti-competitive and could limit consumer choice there.

In America Disney looks set to take over Fox Studios – with its well-known brands of the early Star Wars movies, Avatar and The Simpsons – along with parts of the Fox television network (but not Fox News) and the online movie and TV provider Hulu. Mergers and acquisitions are the order of the day. Disney’s purchase of the Fox/Murdoch entertainment assets in the UK, Europe, the US, Latin America and India, with a price tag of $52 billion, looks big. But the proposed AT&T takeover of Time Warner in the US at a cost of $85 billion is even bigger. As a major communications infrastructure company, AT&T seeks to take over a very big content provider (Warner) and the US Justice Department has already filed an anti-competitive suitseeking to stop the deal. The clash of US titans is getting closer to UK shores, UK regulatory institutions and audiences.

The Atlantic ocean might have been a partial barrier to German U-boats in the 1940s but it is all but irrelevant to the flows of multi-national media developments in the twenty-first century. So, for example, the last few years have seen American takeovers of several of the largest previously independent British television production companies. In 2011 News Corporation (now 21st Century Fox) bought Shine and Endemol; in 2014 Time Warner acquired Shed, renaming it Warner Bros. TV Productions UK. In the same year Discovery and Liberty Global acquired the British indie All 3 Media. These buy-outs may allow for more ambitious and better funded productions but, in prioritising global sales, they might also suppress some of the cultural characteristics and preoccupations of their country of origin.

Some thirty years after its launch Sky has become a major media institution with a turnover of £12.9 billion in 2016-17. £8.6 billion of this total is generated in the UK and Ireland; the rest in Germany, Austria and Italy. The revenue contrasts strikingly with a BBC total income in the same 2016-17 year of £4.9 billion (Sky and BBC annual reports). However, despite having subscribers in around half of UK homes, and despite bringing prized access to sport, Sky’s share of the total UK television audience remains modest, attracting just over 8 per cent of all viewing time in 2016. This compares with significantly larger shares for the two big hitter broadcasters; the BBC in the lead attracted a 32 per cent share, while ITV drew a 21 per cent share (Broadcasters’ Audience Research Board). It is worth noting that in the UK, much of the best and most popular television is subscription-free.

One of the factors driving the new wave of consolidation in both the US and the UK is the emergence of the new and increasingly popular subscription video on demand services such as Netflix and Amazon. These largely advertising free, online services are putting the old broadcasters under pressure, especially in the US where some of the over-large and expensive cable TV packages are being discarded in favour of the Netflix offer. This is the feared ‘cord cutting’ phenomenon that has led many US TV providers to ask whether they are big enough to survive this new competition. Disney’s strategy is to grow through acquisition and to enter the video on demand market by investing large sums in original production. It appears that Murdoch has chosen to avoid the risks of investing in original entertainment (movies, drama), focusing instead on news and the political influence that this can bring. Fox News in the US, unhindered by the UK impartiality requirements, is perhaps the jewel in his crown, along with an extensive range of newspapers in the US, UK and Australia. These are to be his commanding heights.

While many British politicians and TV producers have their eyes on American investment and almost all brains are switched on to the significance of the online environment, it is worth noting – without complacency – the successes of the BBC. The innovative national content creation fund, otherwise known as the BBC licence fee, has served audiences well, as the BBC share of audiences testifies. But the value of this fee for investment in original production was cut significantly by politicians in the British Coalition Government of 2010, and by the Conservative Government of 2015. As the BBC limps increasingly into the arena of international co-production it will face challenges in fulfilling its national mission, just as Disney will face difficulties in bracing itself for entry into the global online market.

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Notes:


Sylvia Harvey is a visiting professor in the School of Media and Communication at the University of Leeds.

 

 

 

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Helena Vieira

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