The State of the ‘Business’ in Show Business

Earlier today, I read confirmation that Disney is buying 21st Century Fox for $52.4 billion.  While I can see a couple of benefits personally, I think overall this isn’t a good thing, and I’m worried about what this could potentially do to the film industry (and possibly beyond that scope).

First, I want to mention two things, two disclaimers really.  I own some stock in Disney, nothing too crazy, but some, so consider that when reading this story.  The second caveat is that I love a ton of the films/properties that Disney owns, and some of those that they’re purchasing.

Ok, now with that out of the way, let me dive into my worries.  In case you missed it at the very beginning of this post, but they’re purchasing it for $52.4 billion dollars, so I hope that impresses upon you the size of a deal like this.  According to an article on fool.com “Disney currently has about 1.61 billion shares outstanding. With a share price of $94 per share, that puts Disney’s market capitalization at roughly $150 billion.” (This was in September of 2016, as of closing today their shares were at $110.57, which is $178 billion.)  That means that they are spending roughly 30% of that to purchase Fox, which is presumably worth that price, and therefore they’re taking on a potential 30% growth.

Growth can be good, but obviously, there should be some fear of monopolization, which is one of my own personal fears about this purchase.  Now to put some perspective into where the film industry stands (which can be difficult as it is constantly evolving) I want to look at films that have earned over $1 billion, not taking inflation into consideration.  As of today, there are 31 films that have reached the billion dollar mark at the global box office; to give you a break down, 15 of those are currently owned (they may not have been originally released but have been since purchased) by Disney, they will gain 2 more in purchasing Fox— including the reigning box office champion Avatar which hit the billion dollar mark nearly 3 times.  The remaining 14 slots in the billion dollar club are split between four other companies.  It is also worth noting that of the top 5 grossers under the billion dollar mark, they own 3. (According to Box Office Mojo)  While this may seem an arbitrary standard, I’m not sure what else to go with.

Now, with the purchase of Fox, Disney also gains some property that many would argue is ensured to do better financially with them than it did separate from them.  They will gain all of the old Star Wars catalog which had been produced before they purchased Lucasfilm in 2012; this gives them the ability to do promotional rereleases whether it be in theaters, home video, or digital release.  They also gain the rights to X-Men and Fantastic Four characters, which essentially gives them the full range of Marvel characters (assuming their deal with Sony and Universal over The Hulk and Spider-Man stays in place).  Both of these aspects are likely to excite many fans, but I think there are large caveats with these.

According to a 2 year old CinemaBlend.com article, there’s been speculation by the comic-book community that Marvel Comics was showing preference to titles they owned the cinematic rights to, while they appeared to actively be working against the titles, like X-Men and Fantastic Four, for which they did not own those rights.  (In the interest of being fair, I thought I had read a similar article years before that, ultimately before Disney purchased Marvel Entertainment, and this article does make reference to “tensions” years earlier.)  This is troubling, because it is in someways a monopolistic move, and while securing the rights to those titles means they won’t need to do this any further in this case, it does show a potential problem with having them gain more of the film industry in general.

If Disney does rise to the standard of a monopoly, or operates in a way that is problematic with anti-trust laws, I’m not convinced that the government has the ability to correctly fix it.  In 1948, in United States V. Paramount Pictures, the Supreme Court ruled that a company couldn’t legally run the three key aspects of the film industry (production, distribution, and exhibition), and broke them into two categories.  You could produce and distribute a film, or you could exhibit it.  I may be in the minority here, but I believe a lot of the issues that we’ve had with ticket prices, and concession prices, and feeling gouged comes down to this break down.  The exhibitors are somewhat at the mercy of the production and distribution companies, and with only one leg under their control, they’re at a disadvantage in bargaining.  The government stepped in and in my opinion screwed it up even worse, so I’m not convinced that they can do much better in seventy years later.  As a lover of film, I don’t want to watch it crumble, or watch it be seized by any one entity.  I want it to have the ability to grow and change and thrive, and I think that the more control one company gets over it, the less likely that is to continue.

All of this doesn’t even take into consideration, how much more lobbying power companies have now, especially companies of this size. Now, speaking of Disney’s growth, and their ability to lobby, I think that there should be concern beyond the effect they will have on the film industry.  There is speculation that, when the copyright of Mickey Mouse was coming due to expire in 1984 (which would have been 56 years after his creation), the Disney company lobbied to change the copyright length to hold on to him longer. (According to Artrepreneur)  As of right now, they hold the copyright until 2023, and with that date fast approaching, I do worry about them gaining more lobbying power.  Sure, it may only be to hold on to their copyrights right now, and much of their other political activism I have agreed with, but this kind of power by corporations is a dangerous thing, and watching as yet another company grows and expands, and absorbs, I’m concerned about the future.

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