Is The Disney/21st Century Fox Deal A ‘Hail Mary’ For Iger?

The Walt Disney Company’s acquisition of 21^st Century Fox for approximately $52.4 billion in stock this week positions the company to take on digital media giants like Amazon, Facebook, Google, Apple and Netflix moving forward, but the question now is whether Disney CEO and chairman Bob Iger will be able to effectively integrate the two companies to do so.

As part of the deal, Iger agreed to stay on as Disney chairman and CEO through 2021, meaning he has at least four more years at the helm to figure out ways to maximize the new Disney’s impact on the modern media landscape in the wake of this week’s huge deal.

“Post-deal integration is always where the money is made or lost. In Disney’s case, they have been good acquirers—Pixar comes to mind—but this isn’t as simple as that bolt-on,” Jeff Cunningham, professor of global leadership at Arizona State University’s Thunderbird School of Global Management told Chief Executive. “This time, he’s taking on a giant corporate culture that prizes itself on independence.”

“This deal makes sense only if [Iger] is planning on a Netflix deal soon after.”—Jeff Cunningham

Bringing Disney and 21^st Century Fox’s enormous content capabilities together provides Iger with an opportunity to take on the big players in the digital media space, but success is far from a slam dunk.

“The entertainment media landscape is changing so dramatically with Netflix, Amazon reshaping both choice and distribution,” Cunningham says. “Iger has a collection of legacy assets, none of which are growing as fast as his digital competitors. I see this as a Hail Mary play on his part, to get bigger in a field in which assets like [21st Century Fox executive chairman Rupert] Murdoch’s are rarely available.”

One question surrounding the deal is tied to 21st Century Fox’s willingness to sell. Would the company have been open to the deal if taking on the streaming media world was a realistic option? Cunningham believes that 21st Century Fox’s executive team saw the writing on the wall and decided to cut bait.

“Murdoch had a team, both of family and trusted lieutenants, who could have taken the asset to the next level if he thought it was worth the candle,” Cunningham told Chief Executive. “My guess is he looked at Amazon and just said, ‘we can’t do that.’ Within 2 to 3 years, I believe Murdoch looks smart and Iger looks greedy.”

The significant challenges tied to taking on companies such as Amazon, Google, Apple and Netflix, which have a big leg up on the competition in areas such as streaming media online, means that Iger has his work cut out for him in the next several years. That is, unless Disney has its eyes set on more mergers and acquisitions in the space that would make the race to the top less daunting.

“This deal makes sense only if [Iger] is planning on a Netflix deal soon after,” Cunningham says. “Otherwise, he’s just taking on baggage.”