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Anxiety, AWOL Executives and "Bloodshed": How Disney Is Making 21st Century Fox Disappear


https://www.hollywoodreporter.com/features/how-disney-will-make-21st-century-fox-disappear-1182704?utm_source=twitter

The level of anxiety on the 20th Century Fox lot in West Los Angeles spiked on a recent Thursday afternoon when employees received a mass email advising that parking lots would be at capacity the following day. Was the Walt Disney Co. purchase of the storied studio finally done? Had an army of human resources executives and lawyers finally been unleashed to effectuate a brutal series of layoffs?

When, the next day, the real reason for the email emerged — rehearsals for Fox's Jan. 27 live broadcast of Rent were commandeering the parking spaces — it didn't provide much comfort. In Building 88, the headquarters of the 83-year-old film studio where mogul Darryl F. Zanuck once greenlit All About Eve and Planet of the Apes, one top marketing executive had sent his most cherished belongings to storage that day just in case he was forced to exit abruptly. Once Disney's $71.3 billion acquisition of a wide swath of 21st Century Fox is complete — possibly by as early as the end of February — one of Hollywood's most storied studios, the home of Shirley Temple movies, The Sound of Music and Avatar, will simply disappear.

But erasing a showbiz institution isn't as easy as flipping a switch (or, in Disney's case, a mouse trap). Assimilating the Fox properties and their thousands of employees is a Herculean task, one that experts say could take years to sort out using dozens of third-party consultants, advisers and compliance officers. Never in the modern era has one major studio gobbled up another. That's been a job left to interlopers like AT&T buying Time Warner in 2018 for $85.4 billion or Comcast acquiring a majority stake in NBCUniversal in 2011. "Merging Disney and Fox studios is enormously complex," says analyst and author Hal Vogel. "One reason is that many talented, well-connected execs are and will be — much more than usual — vying for the same jobs."

The acquisition is Disney chairman and CEO Bob Iger's biggest bet yet and points to the escalating race for scale in a media business rife with digital goliaths Netflix, Facebook and Google. Disney needs a cavalcade of content to feed its planned streaming offerings — it also will own a majority of Hulu — while managing overhead. "It is uniquely interesting, and complex, because it exemplifies this juncture in the way content is delivered and structural changes in the industry," says Jonathan Barnett, director of USC's Media, Entertainment and Technology Law Program.

The result: The number of major studios is about to go from six to five. And as the closing date nears (one longtime employee calls it "D-Day," as in Disney), any exec sighting or piece of gossip increases the tension: When Iger and Lachlan Murdoch took a stroll through the lot several weeks ago, staff emails and texts chronicled their every move. When Rupert Murdoch lunched by himself at his usual table in the corner of the commissary, employees tried to pick up clues from body language. Many also describe a feeling of emptiness on the 53-acre lot, with parking garages clearing out well before traditional quitting time. Some executive parking spaces stay empty all day.

As Disney absorbs much of Fox's film and TV units — Fox Broadcasting, Fox News and TV stations will be spun off into New Fox, headed by Lachlan Murdoch — repercussions will be felt not only in Los Angeles but worldwide. In fiscal 2018, Fox had 22,000 employees across the globe (compared with about 201,000 for Disney). Roughly 7,000 are expected to become part of New Fox. Disney has promised $2 billion in cost savings, so more than 4,000 layoffs are expected (though Disney-skeptic analyst Rich Greenfield puts the number at 5,000 to 10,000 over time). It's harder to predict potential layoffs within the Fox film studio itself, which has about 3,200 employees, but cuts are expected to be especially deep, particularly in overlapping divisions such as marketing, distribution and home entertainment. The number of employees working in TV, whether at 20th Century Fox Television, cable networks including FX and Nat Geo and Fox Sports' international divisions, is difficult to pinpoint, with 21st Century Fox declining comment. The pool of employees going to Disney also will include those working for the 22 Fox regional sports networks, which Disney must sell within 90 days of the deal closing.

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