It’s funny how narratives develop in Hollywood. I was at a dinner this week with a few producers, when the topic turned to Disney, as it often does these days. One of them was quick to note, “The Fox deal—disaster, right?” At the table, it seemed obvious. Of course it was a disaster.
Was it, though? It’s true that Disney’s pricey acquisition of most of 21st Century Fox was premised on the 2017 streaming video landscape, where infinite content promised infinite growth. In March of 2019, when the deal finally closed, C.E.O. Bob Iger, then ramping up for the launch of Disney+, emailed employees that the Fox assets would help Disney “reach farther and aim higher—especially when it comes to building direct connections with consumers.” And it definitely did. Feel free to fight me on this, but I don’t think Disney+, a service that debuted with exactly one original show, would have notched 100 million subscribers in just 16 months without all that Fox content. By comparison, Netflix needed 10 years and more than $100 billion to cross 100 million subs.
We seem to have forgotten that. These days, moderation and discipline in spending are the north stars, at least at the for-profit entertainment companies—meaning not Amazon or Apple. These are the tenets that led investor Nelson Peltz, at the height of his recent megaphoning over Disney’s costs, to roast Iger’s “poor judgment” for “materially overpaying for the Fox assets.” Thanks to Comcast C.E.O. Brian Roberts, the initial $52.4 billion all-stock deal that Iger struck with Rupert Murdoch over wine at the latter’s Moraga Estate winery was run up to $71.3 billion, plus almost $14 billion in Fox debt. Waaaay too much, Peltz argued. “Fox hurt this company,” he barked on CNBC. “Fox took the dividend away. Fox turned what was once a pristine balance sheet into a mess.”