Disney has agreed to buy the Fox Family Worldwide children’s television network for $5.3 billion.
Walt Disney has won this particular battle of the media giants. AOL Time Warner, which owns the Cartoon Network, and Viacom, which owns Nickelodeon, are also understood to have bid for the Fox Family Worldwide children’s television network. But for $3.2 billion in cash and $2.1 billion in assumed debt, Walt Disney will be the next owner of the network.
Haim Saban, CEO of Fox Family since 1997, provoked the sale after exercising an option in his contract that required News Corporation to buy his 49.5% interest. Instead, News Corporation put Fox Family up for sale, which will provide it with much-needed funds for its attempted purchase of DirecTV from GM’s Hughes Electronics.
Disney has its sights set on international expansion. It is aiming to have 30% of its revenue come from international sources in the next five years. At the minute overseas revenues account for just 18% but the purchase of Fox Family Worldwide will boost this figure. As well as providing Disney with an additional 81 million subscribers in the US, the network will provide 24 million in Europe and 10 million in Latin America.
A cable channel that is taken by almost all US cable subscribers is rarely up for grabs and the Fox Family Channel certainly falls in to this category. However, the Family Channel only attracts a small proportion of adult viewers. Disney may be able to raise ratings by adding its own Disney programs and repeating popular shows from ABC on the network. Disney has made good use of this strategy before: its SoapNet channel has proved that reshowing daytime soap operas at night can be a successful tactic.
Disney has suffered from the drop in advertising revenues, and profits have more than halved since 1997. The purchase has a lot of potential, but Disney has not always made the most of its acquisitions in the past.
