Rupert Murdoch's Twenty-First Century Fox has held talks to sell most of its film and television assets to Walt Disney Co, which would gain new programming and expand its international reach, CNBC reported last night.
The two sides are not currently talking, but had held talks in the last few weeks, CNBC said, citing unidentified people familiar with the matter.
The discussions reflect a view among Fox executives that the media company could not reach the size needed to compete with Amazon.com, Netflix and other major media players, according to CNBC.
For Disney, a deal could bring additional programming it could use to lure audiences as the company tries to navigate consumers' rapid migration to digital viewing and compete with heavy spending by technology companies pushing further into Hollywood.
It also could extend Disney's reach into international markets.
Disney, which under US rules could not own two broadcast networks, would not purchase all of Fox, CNBC reported.
It would not seek to buy Fox's sports programming assets for fear of running foul of competition laws with its own ESPN network, and also would not buy Fox News or Fox's broadcast network or local broadcasting affiliates, the report said.
It did discuss buying Fox's movie and TV production studios, cable networks FX and National Geographic and international assets such as the Star network in India and European pay TV provider Sky, CNBC said.
Fox has bid $14.5 billion to acquire the remaining 61% of Sky it does not own, but the acquisition has been delayed by British regulators.
Traditional media giants are scrambling to increase their scale and add new businesses, particularly after AT&T's bid for HBO and CNN owner Time Warner, which is awaiting regulatory approval.
Other media companies also couldbe interested in Fox's assets.
Analysts said the talks increase uncertainty around the Sky transaction.
Disney may want Sky as part of an international streaming strategy, but a deal also would deepen its exposure to traditional businesses that have been under pressure.
Disney has been struggling with subscriber declines at ESPN, its biggest network, and is planning to launch direct-to-consumer video streaming services to reach younger audiences that have shunned traditional cable and satellite offerings.
Chief executive Bob Iger has said he plans to retire from Disney in July 2019, and the company is searching for a successor.
Much of Fox's revenue has come from its cable division, which houses Fox News, FX and other channels.
Fox said in August that it expects to see high single-digit domestic affiliate fee growth every quarter in fiscal 2018.
Fox and Disney are co-owners of Hulu, a streaming service that offers on-demand and live TV packages. Hulu also is partially owned by Comcast Corp and Time Warner.
