On Dec. 14, the day The Walt Disney Co. unveiled its industry-altering $52.4 billion acquisition of 21st Century Fox assets, Peter Rice, president of Fox and CEO of Fox Networks Group, shared a stage with Fox TV Group co-chiefs Gary Newman and Dana Walden and FX Networks CEO John Landgraf. According to staff present, the leaders did their best to rally the troops. What they couldn’t do is proclaim their own job security.
That uncertainty is being felt in commissaries and executive suites throughout the Murdoch empire, most of which over the next 12 to 18 months will be integrated into a Disney content powerhouse under CEO Bob Iger. Analysts predict about $2 billion in “cost savings” from the merger, and “we believe Disney will need to cut well over 5,000 jobs, and the number could easily swell toward 10,000 given the high degree of overlap between the two companies around the world,” wrote analyst and Disney critic Rich Greenfield.
The merger of two of Hollywood’s six major studios reshapes the industry and raises particularly thorny issues for many top execs.
Walden and Newman, for instance, find themselves in a unique situation since Disney is buying the Fox TV studio operation but not the broadcast network. They oversee both, so they could be equally at home staying at Fox or going with Disney. One Wall Street observer suggests the studio business could be folded into ABC Studios, now led by Patrick Moran, so there may be no need for more unit heads.
Walden is one of the names being considered for the top job at Amazon Studios, so some speculate she will ditch old media for new. But her talents developing hits like Empire and This Is Us could be useful as Disney readies a streaming service to compete with Netflix. That upcoming product is a major reason Disney pursued Fox in the first place.
Landgraf also finds himself in a strange spot, even though his talent relationships and success in populating FX with Emmy-winning hits have observers speculating that Disney will prioritize keeping him on board, but FX shows like Sons of Anarchy and American Horror Story do not target Disney’s typical demographic.
As for Rice, he’s running the vast Fox TV group, but he’s a former president of the Fox Searchlight film division, prompting one executive search expert to say Rice has got the best shot at a significant role at Disney, possibly even as an heir apparent to Iger, whose contract was extended through 2021. Among those he’d need to beat out is current Fox CEO James Murdoch, though Disney did not expressly promise Rupert’s youngest son a role in the company as many had expected.
While Rupert and Lachlan Murdoch are expected to focus on the remaining Fox assets (“New Fox,” they are calling it) after the deal closes — including Fox News Channel, Fox Business Network, FS1 and FS2 — James is understood to want a top Disney post.
Given his knowledge of European pay TV giant Sky, of which Fox (now Disney) owns 39 percent, analysts have suggested he could take on an international role. The question is how he would mesh with Disney International chairman Andy Bird, who reports directly to Iger. “James and I will be talking over the next number of months,” Iger said Dec. 14. "He’s going to be integral to the integration process, and he and I will be discussing whether there is a role for him or not at our company.”
Whatever James’ title (if he gets one), the expectation is that he would have four years to work his way into serious consideration as Iger’s successor. Brian Wieser of Pivotal Research Group notes that the harassment issues at Fox News and particularly James’ role in the U.K. phone-hacking scandal that resulted in the shuttering of News of the World could pose problems, especially for an image-conscious company like Disney. “However, we think that it is unlikely any CEO candidate would emerge without some shortcomings,” Wieser says.
Alternatively, those close to Murdoch say he is mulling a new entrepreneurial venture, maybe with Disney’s backing, given that the three Murdochs are set to receive nearly 88 million Disney shares, making them the company’s largest individual shareholders.
Meanwhile, on the film side, 20th Century Fox CEO Stacey Snider — installed in 2015 by the Murdochs — could feel the heat if Fox becomes simply a movie label like Lucasfilm or Pixar under Disney Studios chief Alan Horn. Snider skipped the Washington premiere of Steven Spielberg’s The Post to address top execs the day the deal was announced, with one attendee saying many felt “shell-shocked.”
Still, Snider plays politics well, and Horn will turn 75 in 2018. Her previous work running Universal and DreamWorks, along with her tenure at Fox, could position her as Horn’s successor. Some suggest Disney is comfortable letting Snider operate Fox as a separate studio until (and if) she proves herself worthy of a larger role.
“The case for sticking with Fox studio management is that Disney has traditionally been inclined to allow acquired managers to continue on, as in Pixar, Lucasfilm, etc.,” says Vogel Capital Management CEO and former industry analyst Hal Vogel.
But while top execs will be financially well-off regardless, many rank-and-file employees are panicked. “No one believes assurances from management that our jobs are safe, and the assurances we were given were halfhearted at best,” says one Fox employee after attending a town hall meeting. Indeed, in a letter to employees signed by all three Murdochs, a few sentences were interpreted as an acknowledgment that head count would be slashed: “We are deeply committed to finding opportunities for our people as well as ensuring that anyone impacted is well taken care of,” read the letter.
Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion). At the same time, what remains of Fox will shrink to a market cap of less than $30 billion. And what ultimately will happen to the Murdoch business is far from clear.
Flush with cash, Rupert could take “New Fox” private, but many analysts presume his goal is to merge it with the other company he controls, News Corp, the parent of The Wall Street Journal and other newspapers. While that scenario makes sense given the 86-year-old’s passion for the news business, he said numerous times Dec. 14 that he hadn’t given the prospect much thought. He added, “If we ever do, that would be years away.”
Fox News Channel may be the wild card. Although it could make up more than half of New Fox’s profit, numerous insiders say that Lachlan and James have little interest in the asset. “There are rumors that Fox News itself may be on the for-sale block,” says one insider. “I know people are interested but don’t know the Murdochs’ interest to sell. Conventional wisdom is that the boys would love to dump it, but Rupert’s having fun with it.”
This story first appeared in the Dec. 18 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.