With the $ 71.3 billion merger of $ 71.3 billion of two studios going to close, fears come at the big Fox party when colleagues are preparing to become rivals. Bob Igers every move is scrutinized and 4000 jobs are about to disappear: "It will be bloodshed."
The level of anxiety in the 20th century Fox Party in West Los Angeles spiked on a new Thursday afternoon when employees received a mass mail that advised that parking spaces would be in capacity the next day. Was Walt Disney Co. the purchase of the big studio finally finished? Had an army of human resources leaders and lawyers finally been released to trigger a brutal series of layoffs?
Then the next day, the real reason for the email appeared ̵
But deleting a showbiz institution is not as easy as turning a switch (or in the Disney case a trap). Assimilation of Fox properties and their thousands of employees is a Herculean mission, one that experts say can take years to clear out with dozens of third-party consultants, advisers, and compliance officers. Never in the modern times has a large studio gobbled up another. It has been a job again for interlopers like AT & T bought Time Warner in 2018 for $ 85.4 billion, or Comcast bought a majority stake in NBCUniversal in 2011. "The merger of Disney and Fox studios is hugely complex," analyst and author Hal Vogel. "One reason is that many skilled, well-connected execs are and will be – much more than usual – fighting for the same jobs."
The acquisition is Disney's chairman and CEO Bob Igers greatest effort yet and points to the escalating scale of scale in a media business rife with digital goliaths Netflix, Facebook and Google. Disney needs a cavalcade of content to feed their scheduled streaming offers – it will also own a majority of Hulu – while managing overhead. "It's uniquely interesting and complex because it exemplifies this point in how content is delivered and structural changes in the industry," says Jonathan Barnett, director of USCs Media, Entertainment and Technology Law Program.
Result: The number of large studios is going to range from six to five. And when the end date approaches (a long-standing employee calls it "D-Day", as in Disney), execution or gossip tension increases the excitement: When Iger and Lachlan Murdoch took a walk through the party several weeks ago, employees became emails and texts mentioned every move. When Rupert Murdoch moaned by herself at her regular table in the Commissioner's corner, the staff tried to extract traces of body language. Many also describe a sense of emptiness on the 53-hectare section, with parking garages that clean out well before traditional end times. Some executive parking spaces remain empty throughout the day.
When Disney absorbs a lot of Fox's movie and TV sets – Fox Broadcasting, Fox News and TV stations will be spun in New Fox, led by Lachlan Murdoch – the consequences will not only feel in Los Angeles but worldwide. In fiscal policy 2018, Fox had 22,000 employees worldwide (compared to about 201,000 for Disney). About 7,000 are expected to become part of New Fox. Disney has promised $ 2 billion in cost savings, so more than 4,000 redundancies are expected (although Disney skeptical analyst Rich Greenfield puts the 5,000 to 10,000 figure over time). It is more difficult to predict potential layoffs in the Fox movie studio itself, which has about 3,200 employees, but the cuts are expected to be particularly profound, especially in overlapping divisions such as marketing, distribution, and home entertainment. The number of employees working in television, either in the 20s Fox Television, cable networks, including FX and Nat Geo and Fox Sports international divisions, is difficult to find, with 21st Century Fox declining comment. The pool of staff going to Disney will also include those who work for the 22 Fox regional sports networks, which Disney must sell within 90 days of the contract termination.
"It will be bloodshed over time," Greenfield says. While he and other analysts have largely applauded the merger, he notes that none of the other acquisitions Iger designed – Pixar Animation Studios, Marvel Entertainment and Lucasfilm – have resulted in major layoffs. "This is virgin territory for Disney, which has never done mass integration," he says.
On February 1, the HR department of 21st Century Fox sent a 12-page protocol guide, "What changes, what's not: Countdown to day one," to 21st Century employees who don't want to move to New Fox. For the first time, Fox's staff from Iger, who trumped the creation of a global entertainment company that could exploit the Fox movie and TV brands across the platforms (he had previously used the same remarks during the investor's call). Lachlan and James Murdoch also told the outcome of the Disney-Fox marriage. The subject layoffs were not addressed. "Keep in mind that Disney is designing and employing the integrated future organization," reads an email introducing the guide. "We expect some of these decisions to be made and announced before or in the vicinity. However, given the scale and complexity of the integration, many or even most of the organizational and staffing decisions will likely be made after completion." That means many Fox employees will be out of bounds for weeks or months after their colleagues start working officially for Disney. To help the process, Disney Execs, assisted by attorneys and consultants, has conducted a series of divisional meetings to determine who is doing so.
While the tutor offered practical advice on things like dress code or security badges (both will not change, at least in the beginning), the words about severance pay were probably read most carefully. The document stated that if Disney cannot offer an employee a job "at least comparable to your current role, whether in scope, geography or other aspects, you will have the opportunity to receive retirement."
How much? Last year, 21st Century Fox said employees without contracts will be entitled to "generous" retirement if Disney decides not to keep them beyond the first year after the merger closes. These payouts will translate into four weeks 'pay for each year and up to two years' salary for an employee who has worked there for 26 years or more, according to two sources.
When the dust is settled, the iconic 20th century Fox movie logo (and the audio fanfare) remains only as a label in the Disney station ruled by Emma Watts, now Deputy Chairman and President of the 20th Century Fox Film. She and her production team are expected to make as many as four to five films a year for theatrical releases, far fewer than the typical 12 to 14 titles Fox has released annually. Disney also brings on board the specialty Fox Searchlight division, led by long-time chief Steve Gilula and Nancy Utley. And Elizabeth Gablers Fox 2000 unit has received an invitation to join Disney as well. All four will report to Walt Disney Pictures chairman Alan Horn.
Their current boss, President of 20th Century Fox and CEO Stacey Snider, will go down as soon as the deal is concluded. Like many Fox employees whose fate is known, she has rarely been seen much late. In December, almost like a valedictory, Snider married her staff with a gilt coffee table and goodbye letter celebrating the studio's heritage.
For Fox's film workers who were stuck in limbo, there was a little consolation. A gloomy race at the cashier office in 2018 – Save for the success of Deadpool 2 and Bohemian Rhapsody – have not relieved a feeling that the studio has been moved from life support to hospice. "Waiting is not fun," complains a Fox staff. "The deal was officially announced the day of the premiere of The Post [in December 2017]. It was so long ago. Tom Hanks already has two movies coming out and the deal is not yet finished."
Many Fox filmmakers have already bolted, including top production expert Kira Goldberg, who went to Netflix in December. An insider estimates that a dozen or so executes the movie since landing on streams in the last two months alone. "This is totally second to none," says a top entertainment lawyer. "Nobody knows who's going to work. They all know they're being deceived. When Disney finally owns it, they'll find out everything."
Disney's dominance at the box office has grown exponentially in recent years – it ordered 26 percent of all tickets sold in North America in 2018 – and when the Fox numbers are finished, Disney can easily make up more than a third of its market share. But it is not clear when Horns team will formally take over the management of the marketing and distribution of the 12 Fox films set for release in 2019. (By law, the company cannot say until it is legitimate owner.)
Disney has 10 movies on their own 2019 heavyweight weighting Captain Marvel ; Avengers: Endgame and The Lion King . Fox slate includes Brad Pitt starrer Ad Astra set to open opposite Disney's Aladdin May 24; an untitled Kingsman film about Thanksgiving; and Call of the Wild which opens five days after Star Wars: Episode IX . And Disney will assume responsibility for the long production offerings Fox has with Peter Chernin's Chernin Entertainment and Arnon Milchan's New Regency.
Disney is also inherited James Camerons Avatar franchise (it already has a Avatar theme park attraction in Florida). The 2009 first installment, still the best gross profile of $ 2.8 billion in global ticket sales, is reminded of a bronze plaque nestled in the greenery of the northern edge of building 88, along with a crape myrtle tree planted in honor of film . Avatar 2 is scheduled to hit theaters in December 2020.
Fox's TV operation is expected to take a position with far greater power under the Disney umbrella than remains of the film studio. Peter Rice, prosthesis by Rupert Murdoch, now president of 21st Century Fox, becomes chairman of Walt Disney Television and co-chair of Disney Media Networks, which oversees all Disney TVs Sans ESPN. And Fox TV Group, Chairman and CEO Dana Walden, will chair Disney TV Studios and ABC Entertainment. Walden, FX Chairman John Landgraf, National Geographic Partner Chairman Gary E. Knell, Disney Channels Worldwide President and Chief Creative Officer Gary Marsh and ABC's News Manager James Goldston will report to Rice. Disney announced January 31 that Disney TV-ABC communications chief Kevin Brockman will resign post-close.
Among Waldens first priorities on the TV side will focus on these studios, because she will soon have four labels – 20th TV, Fox 21 TV Studios, ABC Studios and ABC Signature – across the companies. The tendons are on the edge of each. Asked in November if all four would survive, Walden told THR "We are working on it right now." In the same breath, she acknowledged that the devices are not as distinctive as they once were, and noted how 20. Television had been more broadly and broadcast focused and Fox 21 more wired. Now? "Streaming has really blurred the lines," she said, "and we've been working through these issues now."
A twist for all involved: Disney does not have room on the Burbank lot to accommodate the influx, so it has rented space at the Fox Party, which Murdoches still own, for seven years. Watts, Fox Searchlight and Fox 2000 could all be present, even though they will share real estate with their former bosses. "All the buildings need to be reconfigured as the key cards now give you access everywhere," a large employee says. But Watts and some of her team members are likely to move to different buildings. Her office is now located in the historic building 88, which is commanded by Lachlan Murdoch and New Fox. Rupert Murdoch has always preferred Building 100 – a newer place across the road – but his eldest son quickly moved into Building 88 on the departure of movie director and chief executive Jim Gianopulos in 2016.
Although it is too early to know how execs want have employees on both parts to share their time, Walden has driven the idea of spending two days a week at Fox – where 20th producer shows Modern Family and Fresh Off the Boat – and three at Disney, where she will soon take control of assets, including ABC and Freeform. In recent weeks, several sources have suggested that Walden has been a scarce presence on the Fox Party, where her successor, Charlie Collier, has embarked as the leader of her former network. Walen's last day at Fox Broadcasting, located in Building 100, came in mid-November. She is now based on her studio office in nearby Building 103.
Disney employees from the old Fox area, parking structures and a commissioner with New Fox could be difficult. Febr. 1 The HR communication stressed that "if you engage with members of the Fox after the transition, do not share confidential or proprietary information about Disney unless that information is required to provide transitional services."
In a corner of Fox a lot, though one outlet is eagerly accommodating the upcoming marriage. Before Disney bought Lucasfilm, the Fox gift shop had many Star Wars lasts because Fox distributed the films. Now, in addition to Disney branded items from Marvel, Pixar and Disney Animation, the small shop next to the Commissioner will again wear Star Wars lightsabers and Darth Vader shirts. So at least one aspect of the Fox legacy comes full circle.
Lacey Rose contributed to this report.
A version of this story first appeared in the February 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.