The deal of the 21st Century is officially here. The Walt Disney Company is buying most of 21st Century Fox, as both companies announced today. Among the assets included in the purchase is Fox’s movie studio. What belongs to Fox’s movie studio will soon belong to Disney. That means some cool new toys are coming home to Marvel Studios.

Disney CEO Bob Iger has extended his contract through 2021 to oversee this historic merger. He spoke about the deal for the very first time in the official announcement.

“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before. We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”

Fox currently holds the movie rights to X-Men and related franchises like Deadpool. Those rights will eventually go to Disney, where they will be accessible to the Disney-owned Marvel Studios. The same appears to be true of Fantastic Four despite reports that those rights could remain with Constantin Film, the company that had previously shared the rights with Fox. That issue, if it ever really factored into this, has been resolved given that the Fantastic Four franchise was specifically named among entertainment properties joining Disney and, more specifically, the Marvel family in the official announcement.

Disney’s purchase of 21st Century Fox has been reported on for weeks, but if you think it took long for a deal to be struck, just wait to see how long it takes to actually close. The sale will have to successfully navigate government regulation and while Disney and Fox have little reason to worry about the deal being blocked, the process is still time consuming.

In the private sector, the process of completing the many tasks associated with a deal of this size is a long one. All the logistics have to be sorted out as Disney tries to integrate all of these new assets, which go beyond movie and television studios, into the company’s larger portfolio. That can take several months, which means fans should not expect a last-minute Wolverine cameo in Avengers: Infinity War, or worry about Fox’s 2018 Marvel slate.

Fox has three Marvel movies set for release in 2018–New MutantsDeadpool 2, and X-Men: Dark Phoenix. The first two releases, New Mutants and Deadpool 2, are already deep into postproduction and will be out in the first half of the year. X-Men: Dark Phoenix is in production and surely past the point of no return when it comes to spending, so that movie is coming out even if this deal comes together faster than anticipated.

The questions about the future of Fox-made Marvel movies really begin with the 2019 slate. It is unclear if Disney will have any say in Fox’s decisions about what films do and do not go into production next year. Both companies could take a “business as usual” approach just in case the deal gets blocked, but the deal probably isn’t going to be stopped by the government, so that operating plan may not work.

The Marvel-based movies to be considered here are X-ForceGambit, and potentially the new Multiple Man project with James Franco. No one would be more peeved to see X-Force go away than writer/director Drew Goddard. He’s the Charlie Brown of Marvel properties, always having the football yanked away from him right before he can kickoff.

He left his job as showrunner on the first season of Daredevil to go make Sinister Six for Sony, only to have that film cancelled when The Amazing Spider-Man 2 disappointed and prompted Sony to restart the Spidey franchise in partnership with Marvel Studios. It will be deja vu all over again for Goddard if X-Force goes away because the characters are headed to the Marvel Cinematic Universe.

Disney may want to give certain characters a rest before they are likely rebooted in the MCU. Disney may also prefer not to release R-rated movies featuring Marvel characters the way Fox has been doing the past couple years. That could mean changes for X-Force and Multiple Man, if they aren’t dropped from the slate entirely. It could also mean a very different Deadpool 3 than we might would have gotten under Fox.

How much prospective 2019, or even 2020 releases are impacted will depend largely on how quickly this deal is completely finalized. At some point, though, the future of Deadpool probably is PG-13 and that really isn’t a bad thing. The character has plenty of PG-13 source material and he has more to offer moviegoers than F-bombs and severed limbs.

Imagine all the hilarious possibilities that come with an R-rated Deadpool learning to operate within a PG-13 universe. All those self-aware breaks in the fourth wall actually make Deadpool the one character who will not need to be rebooted at all. Ryan Reynolds, if he’s willing, can just jump on over to the MCU, poking fun at the situation and maybe being a little frustrated by bleeped profanity.

There are far more questions than answers at this point, especially when considering that the Marvel portion of the deal, as delightful as it may be for fans, is only a small part of it, relatively speaking. It is going to be that way for some time, as Marvel Studios President Kevin Feige is sure to address the issue in only broad strokes while keeping the focus on the present when the press get their next shot at him during the publicity tour for Black Panther (out February 16).

We do not know exactly when they will arrive or what they will look like when they get there, but the X-Men and (probably) Fantastic Four are on their way home to Marvel Studios. Today is already a major moment in the history of the Marvel Cinematic Universe, perhaps even bigger than February 9, 2015, when we found out Spider-Man was heading home.

You can read more about this deal via the complete official announcement below.

The Walt Disney Company To Acquire Twenty-First Century Fox, Inc., After Spinoff Of Certain Businesses, For $52.4 Billion In Stock

21st Century Fox to spin off Fox Broadcasting network and stations, Fox News, Fox Business, FS1, FS2 and Big Ten Network to its shareholders

  • Acquisition complements and enhances The Walt Disney Company’s ability to provide consumers around the world with more appealing content and entertainment options
  • Transaction to include 21st Century Fox’s film and television studios, cable entertainment networks and international TV businesses
  • Popular entertainment properties including X-Men, Avatar, The Simpsons, FX Networks and National Geographic to join Disney’s portfolio
  • Expands Disney’s direct-to-consumer offerings with addition of 21st Century Fox’s entertainment content, capabilities in the Americas, Europe and Asia; Hulu stake becomes a controlling interest
  • Addition of extensive international properties, including Star in India and Fox’s 39% ownership of Sky across Europe, enhances Disney’s position as a truly global entertainment company with world-class offerings in key regions
  • Robert A. Iger to remain Chairman and CEO of The Walt Disney Company through 2021

The Walt Disney Company and Twenty-First Century Fox, Inc. (21st Century Fox) today announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock (subject to adjustment). Building on Disney’s commitment to deliver the highest quality branded entertainment, the acquisition of these complementary assets would allow Disney to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose. Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders.

Under the terms of the agreement, shareholders of 21st Century Fox will receive 0.2745 Disney shares for each 21st Century Fox share they hold (subject to adjustment for certain tax liabilities as described below). The exchange ratio was set based on a 30-day volume weighted average price of Disney stock. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $52.4 billion and a total transaction value of approximately $66.1 billion (in each case based on the stated exchange ratio assuming no adjustment) for the business to be acquired by Disney, which includes consolidated assets along with a number of equity investments. 

Popular Entertainment Properties to Join Disney Family

Combining with Disney are 21st Century Fox’s critically acclaimed film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, which together offer diverse and compelling storytelling businesses and are the homes of AvatarX-MenFantastic Four and Deadpool, as well as The Grand Budapest HotelHidden FiguresGone GirlThe Shape of Water and The Martian—and its storied television creative units, Twentieth Century Fox Television, FX Productions and Fox21, which have brought The AmericansThis Is UsModern FamilyThe Simpsons and so many more hit TV series to viewers across the globe. Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group.

“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”

“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Rupert Murdoch, Executive Chairman of 21st Century Fox. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”

At the request of both 21st Century Fox and the Disney Board of Directors, Mr. Iger has agreed to continue as Chairman and Chief Executive Officer of The Walt Disney Company through the end of calendar year 2021.

“When considering this strategic acquisition, it was important to the Board that Bob remain as Chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate such a massive, complex undertaking,” said Orin C. Smith, Lead Independent Director of the Disney Board. “We share the belief of our counterparts at 21st Century Fox that extending his tenure is in the best interests of our company and our shareholders, and will be critical to Disney’s ability to effectively drive long-term value from this extraordinary acquisition.”

Benefits to Consumers

The acquisition will enable Disney to accelerate its use of innovative technologies, including its BAMTECH platform, to create more ways for its storytellers to entertain and connect directly with audiences while providing more choices for how they consume content. The complementary offerings of each company enhance Disney’s development of films, television programming and related products to provide consumers with a more enjoyable and immersive entertainment experience.

Bringing on board 21st Century Fox’s entertainment content and capabilities, along with its broad international footprint and a world-class team of managers and storytellers, will allow Disney to further its efforts to provide a more compelling entertainment experience through its direct-to-consumer (DTC) offerings. This transaction will enable Disney’s recently announced Disney and ESPN-branded DTC offerings, as well as Hulu, to create more appealing and engaging experiences, delivering content, entertainment and sports to consumers around the world wherever and however they want to enjoy it.

The agreement also provides Disney with the opportunity to reunite the X-Men, Fantastic Four and Deadpool with the Marvel family under one roof and create richer, more complex worlds of inter-related characters and stories that audiences have shown they love. The addition of Avatar to its family of films also promises expanded opportunities for consumers to watch and experience storytelling within these extraordinary fantasy worlds. Already, guests at Disney’s Animal Kingdom Park at Walt Disney World Resort can experience the magic of Pandora—The World of Avatar, a new land inspired by the Fox film franchise that opened earlier this year. And through the incredible storytelling of National Geographic—whose mission is to explore and protect our planet and inspire new generations through education initiatives and resources—Disney will be able to offer more ways than ever before to bring kids and families the world and all that is in it.

Enhancing Disney’s Worldwide Offerings

Adding 21st Century Fox’s premier international properties enhances Disney’s position as a truly global entertainment company with authentic local production and consumer services across high-growth regions, including a richer array of local, national and global sporting events that ESPN can make available to fans around the world. The transaction boosts Disney’s international revenue mix and exposure.

Disney’s international reach would greatly expand through the addition of Sky, which serves nearly 23 million households in the UK, Ireland, Germany, Austria and Italy; Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.

Prior to the close of the transaction, it is anticipated that 21st Century Fox will seek to complete its planned acquisition of the 61% of Sky it doesn’t already own. Sky is one of Europe’s most successful pay television and creative enterprises with innovative and high-quality direct-to-consumer platforms, resonant brands and a strong and respected leadership team. 21st Century Fox remains fully committed to completing the current Sky offer and anticipates that, subject to the necessary regulatory consents, the transaction will close by June 30, 2018. Assuming 21st Century Fox completes its acquisition of Sky prior to closing of the transaction, The Walt Disney Company would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.

Transaction Highlights

The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.

Terms of the transaction call for Disney to issue approximately 515 million new shares to 21st Century Fox shareholders, representing approximately a 25% stake in Disney on a pro forma basis. The per share consideration is subject to adjustment for certain tax liabilities arising from the spinoff and other transactions related to the acquisition. The initial exchange ratio of 0.2745 Disney shares for each 21st Century Fox share was set based on an estimate of such tax liabilities to be covered by an $8.5 billion cash dividend to 21st Century Fox from the company to be spun off. The exchange ratio will be adjusted immediately prior to closing of the acquisition based on an updated estimate of such tax liabilities. Such adjustment could increase or decrease the exchange ratio, depending upon whether the final estimate is lower or higher, respectively, than the initial estimate. However, if the final estimate of the tax liabilities is lower than the initial estimate, the first $2 billion of that adjustment will instead be made by net reduction in the amount of the cash dividend to 21st Century Fox from the company to be spun off. The amount of such tax liabilities will depend upon several factors, including tax rates in effect at the time of closing as well as the value of the company to be spun off.

The Boards of Directors of Disney and 21st Century Fox have approved the transaction, which is subject to shareholder approval by 21st Century Fox and Disney shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions.