Fox Family Channel
Deal will strengthen portfolio of cable holdings
By Jeff Bercovici
One of the nastier marriages in cable is coming to an end, and in the process the television franchise that is Disney is about to become even more omnipresent.
As early as today, Disney is expected to acquire Fox Family Worldwide for $3.2 billion from News Corp. and Saban Entertainment.
The U.S. channel, Fox Family, will be renamed ABC Family and will become an outlet for reruns of shows on the Disney-owned ABC broadcast network and other Disney entertainment properties, among other offerings.
Disney sees the acquisition as a means of beefing up its portfolio of cable networks, which includes ESPN, the Disney Channel, and interests in Lifetime, E! Entertainment Television and A&E.
But it also sees an opportunity, through use of its programming, to restore luster to the ailing Fox Family channel, which has seen its ranking slide to 17th from 10th as a result of an increasingly competitive race for younger viewers and the bickering over ownership between News. Corp. and Saban.
Among other advantages, the deal will strengthen Disney's position with younger viewers against the continuing age erosion of broadcast viewership. ABC has been especially affected over the past season with the aging viewership of its hit show "Who Wants to Be a Millionaire."
In the U.S., Disney will gain 81 million cable viewers, representing a substantial new base of viewers for its cable franchise.
Though Disney is believed to be paying dearly for the network, the deal is being looked upon by analysts as a shrewd investment on the part of CEO Michael Eisner. It is a way to add new means of distribution in an era of consolidation of major distribution providers such as AOL Time Warner.
Globally, Disney will pick up some 34 million viewers across 50 countries--24 million in Europe and another 10 million in Latin America. It will also acquire the publicly held Fox Kids Europe.
One report speculates that Disney will convert the international channels to Toon Disney, a three-year-old cartoon network with 15 million subscribers in this country.
Not in the deal is the U.S. edition of Fox Kids Network, which Fox will control through a buyout of Saban's interest.
Disney officials are not publicly commenting on any aspects of the deal, but privately the company appears to have been busy through the weekend stoking the nation's business press with stories of the acquisition and the benefits it will bring to Disney.
Disney's stock has taken a beating amid rising criticism of Eisner for his management of the company and his failure to join the consolidation race.
The deal brings to an end a bitter five-year partnership between Haim Saban, the cartoon marketer behind "Mighty Morphin Power Rangers," and News Corp.
At least for News Corp the timing--and cash--couldn't come at a better time, as the media mogul is attempting to gain control of DirecTV, the satellite operation, through the acquisition of General Motors' Hughes Electronics.
The partnership between Saban and Fox was originally intended as a counterstrike against Disney and the WB and their increasing strength in the children's TV market.
The two joined to buy the International Family Channel from evangelist Pat Robertson in 1997, but the two sides squabbled over strategies, among other issues, and ratings tumbled. Only this year has the network seen those losses reversed.
Last year, Saban opted to force News Corp. to sell its interest, but the sides could not agree on a value, and they ultimately decided to sell out entirely to a third party.
July 23, 2001 © 2001 Media Life
-Jeff Bercovici is a staff writer for Media Life.