Beijing Approves Disney-Fox Asset Deal -- WSJ

By Erich Schwartzel 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 20, 2018).

LOS ANGELES -- Chinese regulators have approved Walt Disney Co.'s $71.3 billion plan to acquire major assets of 21st Century Fox Inc. a Disney spokesman said, putting the deal on track to close sooner than initially expected.

The approval, granted without conditions, is a relief to some corners of Wall Street, where analysts had feared Chinese regulators could stall the deal, given the country's trade tensions with the U.S.

On an earnings call this month, Disney Chief Executive Robert Iger said the acquisition could close "meaningfully earlier" than the projected mid-2019 date.

The Fox deal is a core component of Disney's strategic shift toward direct-to-consumer streaming services to compete directly with Netflix Inc. and pipe its programming directly into the home. In addition to a Disney-branded service set to launch late next year, Disney has created an ESPN-branded service and will become a majority owner of Hulu when the Fox deal closes.

Fox's library of programming, from National Geographic to its FX cable network, will help fill out those services and reduce the number of major Hollywood studios to five, from six.

The antitrust authority of the European Union approved the deal this month. Some international jurisdictions have yet to weigh in.

As part of the U.S. Justice Department's approval of the deal, Disney will need to divest Fox's regional sports networks. It also lost Fox's stake in the Sky PLC pay-TV company to rival Comcast Corp. The divestiture and Sky sale are expected to reduce the overall cost of the deal by more than $20 billion.

China is an important market for Disney. Since its opening in 2016, the $5.5 billion Shanghai Disneyland Resort has helped drive revenue growth in Disney's theme-parks division, and the country's moviegoers have flocked to superhero offerings from its Marvel Studios.

The Wall Street Journal-parent News Corp and 21st Century Fox share common ownership.

(END) Dow Jones Newswires

November 20, 2018 02:47 ET (07:47 GMT)

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