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Shareholders approve Disney’s $73.1B acquisition of Fox entertainment

UPDATED: Fri., July 27, 2018

Walt Disney Co.’s ability to turn intellectual property into cold, hard cash will serve it well as it builds its own video streaming service. (Richard Drew / AP)
Walt Disney Co.’s ability to turn intellectual property into cold, hard cash will serve it well as it builds its own video streaming service. (Richard Drew / AP)
From wire reports

NEW YORK – Disney’s $71.3 billion acquisition of Twenty-First Century Fox’s entertainment division is one step closer after shareholders overwhelmingly approved the deal Friday.

The tie-up brings together Marvel’s X-Men and Avengers franchises and creates an entertainment behemoth in the digital streaming era that is expected to dramatically reshape the entertainment industry.

The shareholder vote caps a saga that began in December 2017, when Disney made its first offer for part of Rupert Murdoch’s media conglomerate. It kicked off a bidding war with Comcast, which dropped out last week. The Fox deal will help Disney compete with technology players like Amazon and Netflix.

The deal’s contours began to form nearly a year ago over wine between Disney Chief Executive Bob Iger and Murdoch at the elder mogul’s Moraga vineyard above Bel-Air. Friday’s vote was more official: The two companies held separate shareholder meetings concurrently in the same Hilton hotel a couple of blocks from Fox’s headquarters in midtown Manhattan.

Neither Murdoch nor Iger were in attendance. The meetings, which took just 12 minutes, were conducted by the companies’ general counsels and other members of senior staff.

Fox general counsel Gerson A. Zweifach first announced that its five proposals had been approved by proxies of “a majority vote.” A few minutes later, at the Disney meeting, Disney general counsel Alan Braverman announced that Disney’s sole measure – to issue additional shares to buy Fox – also had been approved by shareholders. Braverman then adjourned the meeting.

The lightning-quick approval caps Murdoch’s decision in December to accept Disney’s $52 billion bid for Fox’s television and movie studio, cable television channels FX and National Geographic, Fox’s stake in streaming service Hulu, television operations in India and Fox’s 39 percent stake in London-based pay-TV company Sky.

But Murdoch has Comcast Chairman and Chief Executive Brian Roberts to thank for a more lucrative price. In early June, Comcast made its own $65-billion offer for the same Fox assets, which forced Iger to pony up $19 billion more than Disney’s initial bid to claim the prize.

The Murdoch family, which holds 17 percent of Fox’s outstanding shares, could come away with Disney stock valued at more than $12 billion.

The structure of the Disney transaction allows shareholders, including the Murdoch family, to take their share of the proceeds in cash or Disney stock. Because the Murdochs are opting for stock, they will become major shareholders in Disney.

The sale isn’t expected to be finalized until next year. Although the transaction has already received the blessing of President Trump’s Justice Department, the two companies still must obtain regulatory approvals from governments around the globe. Disney also has agreed to divest Fox’s 22 regional sports networks.

Disney has arranged $34 billion in financing to help pay for the new assets.

Murdoch, 87, and his family won’t be exiting media, however. The family intends to hold onto several Fox assets, including Fox News Channel, Fox Business Network, two national sports networks, television stations and the Fox broadcast network. Those properties will form a new company.

In addition, the Murdochs also have a controlling stake in the publishing company, News Corp., which owns the Wall Street Journal, Times of London, newspapers in Australia and the HarperCollins book publishing house.

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