21st Century Fox (US)

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Fox served for several years as an umbrella brand for the entertainment assets of what was until recently Rupert Murdoch's News Corporation. Following the spin-off of its publishing operations, those Fox businesses now form the core of the renamed 21st Century Fox group. Cornerstones are movie studio Twentieth Century Fox and the Fox TV broadcast network, which has risen steadily in the ratings from rank outsider to one of the top networks. At the same time, the Fox News cable channel has established a position as the most watched news broadcaster in the US. The business has also dabbled heavily, but not always happily, in interactive media through the acquisition or development of destinations sites including the social networking portal MySpace and online video service Hulu, now jointly owned by Fox, Disney, Time Warner and Comcast. For several years between 1999 and 2005, Fox was a self-contained and separately quoted division of News Corp. It was later absorbed back into the larger group, before being re-established as a standalone business from July 2013. The new 21st Century Fox also controls most of the old group's international satellite broadcasting interests including its holding in Sky in Europe. After years, decades even, as an acquirer of other businesses, Fox reversed its strategy at the end of 2017, accepting an offer to itself be acquired by Disney for $66bn, subject to approval. The bulk of Fox's entertainment assets will transfer to Disney; Fox will slim down to its US broadcast network, and cable strands Fox News and Fox Sports 1.

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Brands

Fox Movies Fox News
Fox Searchlight Fox Sports Net
Fox Home Entertainment FX
National Geographic TV The Speed Channel
Hulu.com MyNetworkTV

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 14th Dec 2017: Comcast dropped out of negotiations to acquire selected assets of 21st Century Fox, citing a lack of engagement on the latter's part. That allowed Disney to seal a deal, which was announced this morning. Disney will acquire all of 21st Century Fox for $52.4bn in stock, plus the assumption of $13.7bn of Fox debt. It will keep Fox's movie and TV studio, its entertainment-based cable channels including FX and regional sports strands, and its controlling stakes in satellite broadcasters Sky and Star of India. The other units - the Fox broadcast network, Fox News cable channel, Fox Sports 1 & 2 and Big Ten Network - will be spun out to existing Fox shareholders as a separate quoted entity. Fox investors, including the Murdoch clan, would also end up with around 25% of an enlarged Disney.

Adbrands Weekly Update 7th Dec 2017: Walt Disney re-opened talks with 21st Century Fox regarding the acquisition of a collection of assets including the Fox movie studio, the Star TV satellite broadcast business in India and a controlling stake in Sky in Europe, as well as selected US entertainment cable channels including FX. The Fox TV network, and Fox News and Fox Sports cable channels are not included in any discussions. Comcast is also said to remain in active talks with Fox, which suggests that some form of deal with one or other or even another suitor is likely. Disney and Comcast could even potentially join forces on a bid for Sky and Star. They are already joint owners with Fox of Hulu in the US. A deal with Disney could also solve another problem on the horizon for that group: finding a successor to current CEO Bob Iger. According to some reports, Fox CEO James Murdoch is ready to step out from under the shadow of his father Rupert and brother Lachlan. He may choose to follow a more entrepreneurial route of his own, but leadership of a much enlarged Disney group would be a considerable temptation.

Adbrands Weekly Update 23rd November 2017: News of Disney's reported approach for the 21st Century Fox has effectively raised an "in play" sign over Fox's filmed entertainment and non-news cable assets. Like sharks scenting blood in the water, Comcast, Verizon and Sony also all made overtures to the group. Any such deal, if it happens, would be significant, with a price tag that could hit $50bn.

Adbrands Weekly Update 16th Nov 2017: Polarisation between supporters of America's political left and right over Fox News coverage continues to increase. It's hard to see (and worrying to imagine) where this escalation will end. Left-wing group Media Matters called for an advertiser boycott of lead anchor Sean Hannity's top-rated primetime show after he appeared to go easy on Alabama Senate candidate Roy Moore, who has been accused of past inappropriate contact with underage girls. Several advertisers, including E-Trade and Keurig, withdrew spots from the show, prompting a return boycott from Hannity's fans. Some posted videos of themselves smashing their Keurig coffeemakers; the backlash was so intense that Keurig CEO Bob Gamgort was forced to issue a statement apologising for "taking sides" over the issue. However, Hannity's following on the right, and that of Fox News hosts, is unlikely to be diminished. Indeed, its further shift away from the centreground has prompted a surge in ratings, putting it well ahead of rival cable news channels, even in the most valued 18-49 demographic. Sean Hannity's show average 3.2m viewers per night during October, compared to 2.5m for its closest rival, MSNBC's Rachel Maddow. Another surge of right-wing rage accompanied a broadcast by Fox News' only remaining centrist anchor Shepard Smith after he bravely debunked conspiracy theories about Hillary Clinton and an old uranium deal. Riding the crest of this general wave of indignation, cable channels were again the star performers in 21st Century Fox's latest quarterly results. Though performance of individual strands like Fox News were not broken out, combined revenues rose by 10% in the quarter, driven by increases in both affiliate fees and advertising, while operating income was up 9%, accounting for almost 85% of the group total.

Adbrands Weekly Update 9th Nov 2017: Clearly, Walt Disney is serious about expanding its content library ahead of the launch of at least two separate own-label streaming services next year and in 2019. The House of Mouse has already said it will no longer offer certain future releases, including Star Wars and Marvel movies, to Netflix and other third-party streaming services, but will make them available exclusively to its own subscribers. This week it was revealed that Disney has made an approach to 21st Century Fox to acquire that group's filmed entertainment studio, back catalogue and some of its cable channels, as well controlling stakes in two additional content channels: European satellite broadcaster Sky and US-based Hulu. The Murdoch-owned group would retain the Fox broadcast network and its news and cable sports channels (Disney already owns rivals ABC and ESPN). Far from rebuffing the approach, the Murdoch family is apparently willing to consider a sale, but it didn't like the price Disney offered, or certain other undisclosed terms of the deal. Talks appear to have ended, but may yet be restarted, especially if Fox's bid to take full control of Sky is blocked by UK regulators.

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Background

Free for all users | see full profile for current activities: Rupert Murdoch acquired Twentieth Century Fox in 1985, exactly 50 years after it was first created by the merger of Darryl F Zanuck's independent production company Twentieth Century Pictures with Fox Film Corporation, one of the early pioneers of the industry. Hungarian immigrant William Fox had been one of the first independent filmmakers in the United States. He first set up his company in 1909 to oppose the monopoly held by Thomas Edison's Motion Picture Patents Company on film manufacturing and distribution. Officially an "outlaw", he defied the MPPC with a string of sensational melodramas starring sexy "vamp" star Theda Bara as well as crowd-pleasing cowboy pictures with Tom Mix. Fox also built a chain of lavishly decorated movie theatres across the country. When sound arrived in the early 1930s, Fox invested heavily in the new equipment, but was side-swiped by the depression and was forced to sell off his production business in order to hold on to the cinemas.

At around the same time, Darryl Zanuck, the ambitious young head of production at Warner Brothers, resigned over a salary dispute. Determined to write his own paychecks in future, he formed independent production company Twentieth Century Pictures, agreeing a deal with well-established United Artists to distribute his movies. However the UA deal quickly soured, and Zanuck was forced to find a new partner. In 1935 he agreed to merge his fledgling business with ailing Fox Film to form Twentieth Century Fox, poaching UA's Joseph Schenk to become chairman. (Despite the sale of Fox Studios, William Fox was forced to declare bankruptcy in 1936, but later tried to bribe a judge and was jailed for a year in 1942. He died in 1952).

Zanuck remained the figurehead for Twentieth Century Fox for almost four decades. Although he could be as tyrannical and mercurial as any of his peers, he was arguably one of the most creative of the studio heads, interfering incessantly with scripts (as well as with his roster of eager young starlets) but rarely intruding in the actual film-making process. As a result, Fox quickly became known as the directors' studio, a comparatively hassle-free home for "auteurs" such as Ernst Lubitsch, John Ford, Elia Kazan and Joseph Mankiewicz. Virtually the only gentile studio boss in Hollywood, Zanuck also tended to steer clear of the sentimental fantasies produced by other studios. Instead he broke new ground, daring to tackle more controversial social issues such as dustbowl poverty (memorably in The Grapes of Wrath, which author John Steinbeck described as even harsher than his original novel), anti-Semitism (Gentleman's Agreement), racism (Pinky) and mental illness (The Snake Pit).

At the same time, he kept audiences happy with a string of box-office female stars including Shirley Temple during the 1930s, Betty Grable in the 1940s, Marilyn Monroe and Jayne Mansfield in 1950s. In a bid to ward off the threat from television during that decade, Zanuck invented big budget historical spectacle with The Robe, the first movie filmed in Cinemascope. But the march of television was relentless and Zanuck stunned the industry when he bailed out from Fox in 1956 and moved to Europe to become an independent producer.

Initially the studio continued to prosper, turning its attention to big budget musicals, and scoring hits with adaptations of stage triumphs The King and I and South Pacific. But in the early 1960s, disaster struck when two more expensive musicals, Star! and Hello Dolly both failed at the box office. At the same time the studio was struggling desperately to contain disastrous cost overruns on the production of Cleopatra with Elizabeth Taylor and Richard Burton. Meanwhile former boss Zanuck was riding high on the success of his independently produced D Day epic The Longest Day, and in 1963 he was begged by Twentieth Century Fox's board to take back control of the studio. He agreed, installing son Richard Zanuck as head of production. Their first project was another musical, a highly unpromising tale of a nun who becomes surrogate mother to an Austrian family at the outset of World War II. But The Sound Of Music turned out to be a box office smash, earning five Oscars and ending up as the most successful movie since Gone With The Wind almost 30 years before.

That was to be Darryl Zanuck's swansong. There were no follow-ups to the success of The Sound Of Music and the studio struggled through the second half of the decade. After another mammoth flop in 1968 with Doctor Doolittle, the Fox board made Zanuck Jr acting president of the studio, but the infighting between father and son grew unmanageable, and in 1971 both Zanucks were forced out. Twentieth Century Fox drifted along for a few years but then got a new lease of life in 1977 when it agreed to finance production of another very unpromising-sounding movie, a science fiction adventure set in "a galaxy far far away". Not even director George Lucas had anticipated just how enormously successful Star Wars would be, quickly becoming the most successful film of all time.

With the movie industry now regarded as a hot investment, Fox was acquired in 1981 by oil tycoon Marvin Davis for $722m. He played with the business for four years before selling it on to Rupert Murdoch at a loss for $575m. For Murdoch it was to be the platform for a new entertainment business which would run alongside his newspaper interests in America, acquired a few years earlier. In 1986 he established a television arm with the purchase of six stations from Metromedia. A decade later he established cable news channel Fox News to rival the then all-powerful CNN, followed by a family strand one year later with the acquisition of Pat Robertson's International Family Entertainment. That company's Family Channel was promptly rebranded as Fox Family Worldwide, becoming the springboard for the rollout of the Fox Kids cable and satellite channels. A sports channel was launched the same year, initially as a joint venture with Liberty Media Group. (Fox bought out Liberty in 1999 and rebranded the channel as Fox Sports Net). In order to bolster the output of his sports channels, News Corp acquired the Los Angeles Dodgers in 1998. Fox scored that year with the movie Titanic which beat the odds to become the highest-grossing film of all time. Buoyed by that movie's success, News Corp floated off a 19% stake in Fox Entertainment, generating $2.8bn of cash, then one of the largest ever US corporate offerings. (Those shares were bought back in 2005 for around $6.2bn in News Corp stock).

In 2001 the group began shuffling its pack of broadcast interests, grouping them as Fox Cable Networks, while also acquiring a pack of additional television stations across the US from Chris-Craft. At the same time, the company's partner in Fox Family Worldwide, TV entrepreneur Haim Saban, exercised his option to force News Corp to buy his 49% stake in the business. Unwilling to take full ownership, News Corp began looking for a buyer for the whole business. It was subsequently sold to Walt Disney's ABC division in 2001. In 2003, after what had been literally years of on-off negotiations with General Motors, News Corporation agreed a deal to purchase the controlling stake in Hughes Corporation. News Corp transferred its ownership of Hughes into Fox Entertainment Group.

In 2004, Fox's 169 US television stations were each fined $7,000 by the FCC for airing an episode of reality TV show Married In America in which topless couples sprayed whipped cream on each other, before the 10pm watershed. The combined fine totaled almost $1.2m, a new record for indecency penalties against television broadcasters, more than double that handed to CBS for the infamous incident in which Janet Jackson exposed a breast during the 2004 Super Bowl. See full profile for current activities


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