CNBC reported yesterday that Walt Disney Company has been in talks with Twenty First Century Fox on acquisition of most of Fox’s assets with the exception of news and sports. (Can you imagine Rupert Murdoch giving up news channels?) The market really liked the idea, as both companies’ stock prices went up. Typically, the acquiring company’s stock would come down when merger talks start. For Disney’s stocks to go up on the news, this was not insignificant. Twenty First Century Fox was reported to be concerned about the scale of the media industry, given the rise of the FANG companies in the same space. One of the strategic controls of the industry lies in content creation. With Netflix and Amazon repeatedly churning out award-winning original content backed by advanced data analytics, Fox was right in thinking that perhaps the only player that could compete against the tech companies was Disney. Disney, after announcing the break with Netflix and the launch of their own streaming service, could definitely use the content assets at Fox. Having said that, the content business is only as good as its people. Netflix has already hired Shonda Rhimes. Let’s wait and see which other heavy-hitter content creators will be leaving Fox for Netflix, Amazon, or wait for it… Apple, who has committed $1 billion for content creation in 2018.

One interesting thing to note: when David Faber broke the story on CNBC yesterday, he made a point in saying that the two companies are not talking at the moment. It sounds like the acquisition plan is not actively happening. My speculation is that there are some really smart people in both companies. They wanted to let the market believe there is a chance the acquisition might happen and see how the market would react. The market didn’t disappoint. With both companies’ stocks going up and up, it is probably not unreasonable to think that talks will resume soon.

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