Disney’s 2019 acquisition of most 20th Century Fox assets in a deal worth north of $71 billion enriched the Murdoch family but also swelled Disney’s debt and continues to have a mixed response from Wall Street. On a call with analysts today after quarterly earnings, Bob Iger strongly defended the move as critical to completing Disney’s content and distribution heading into the streaming era.“In late 2017, when we announced initially that we were acquiring assets from 20th Century Fox, we specifically mentioned that we were doing so through the lens of streaming. We saw a world where streaming was going to proliferate, and we knew we needed not only more content with but more distribution,” he said in response to a question about media consolidation.“And with that came just a tremendous amount of content. When you talk about 60 Emmys, so much of that came from that acquisition. Or when we talk about Avatar, for instance, that came from that acquisition. I could go on and on. In addition, people forget it came with control of Hulu, and ultimately ownership of Hulu. That distribution — packaged well, integrated well with Disney+ — has enabled us to achieve the numbers we’ve achieved … and an ability to really see into the future of streaming through a very optimistic lens.“So in a way, we’ve already consolidated, and while we’ll always look opportunistically … We don’t really need more assets right now, either from a distribution or from a content perspective, to thrive in basically a disruptive media world.”CFO Hugh Johnson weighed in on possible asset sales, given Comcast’s recent decision to spin off its cable networks into a separate company.The former PepsiCo chief financial officer said he’d looked carefully at creating value through divestitures at the beverage giant, then at Disney. “And candidly, I just didn’t see [it]. And I spent a considerable amount of time studying it.“It’s always easy to sort of play with spreadsheets and sort of make the math look like there’s value creation, but at the end of the day, there’s two things to consider. Number one is, what are the prices you would get? And then number two, what’s the frictional cost, operationally, of separating those assets? And as I went through the math on both, it was pretty clear to me that there wasn’t a value creating opportunity for Disney. I can’t speak to other companies and what opportunities they have with the assets they have, but I absolutely did not see that for Disney.”
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