Recently Walt Disney Company established a deal to merge with 21st Century Fox. Fox was controlled by Rupert Murdoch who agreed to an all stock transaction valued at approximately $52.4 billion. Disney believes that the acquisition will create the opportunity to consolidate media holdings, converge front runners in television and movie production, major cable properties and a vast network of local sports cable channels.
For a long while Disney wanted to build greater international distribution channels such as those afforded by Fox’s properties and relationships maintained abroad. Supporters of this deal believe that the acquisition is setting the stage for actual competition, new technologies and indirectly a new media revolution. There has been no notably resistance to the new agreement even though it strengthens Walt Disney’s position among the other large oligopolies and poses no threat to ‘corrupt’ neoliberalism.
Horizontal integration occurs when large oligopolies attempt to consolidate and take over smaller media holdings. By nipping the bud in negative horizontal integration there will be increased media competition and a lower percentage of media ownership among large oligopolies. The acquisition made by Disney is being identified as one of the greatest attempts made by a traditional media company against tech giants who have long controlled the entertainment business.
To avoid heightened suspicions of horizontal integration to control the market and reduce competition Murdoch has not consolidated Fox broadcast network or Fox’s 28 local stations to Disney who already owns ABC and eight other local stations. However this horizontal integration of other shares will spark a flame in the oligopolistic power that exists in the entertainment industry. By merging with Fox, Disney will be able to secure its position among the big six and further decrease the competition that has long been stagnant due to the concentration of media shares among other big companies such as Time Warner, CBS Corporation, Viacom, NBC Universal and Rupert Murdoch News Corporation.
Digital oligopoly helps to identify the presence of these organizations and conglomerates and how their ‘liberal-leaning’ negatively impacts their consumers and democracy. American Journalist Elizabeth Kolbert declares that media oligopoly is responsible for the political shift to the right since traditional media gatekeepers have been displaced by the tech oligopoly. In this example Netflix had long been a big tech threat to Walt Disney. Antitrust interventions from the government to break up companies with excessive market shares and to provide a more favorable atmosphere for competitors and consumers has been established.
Regulators have been weary of the idea of combining two companies in the same market where in the past, the Justice Department had opposed these media consolidations when it sued to block AT&T’s acquisition of Time Warner. Similarly, Walt Disney and Fox have overlapping properties that could cause antitrust regulators. Despite this, critics have identified the political economy of antitrust actions in that Time Warner includes CNN which has been a ‘rhetorical target’ of President Donald Trump. In addition, Murdoch is a trusted adviser to the president on media issues which strengthens his ally with the government in selling his shares. Therefore with no resistance from the government Disney is able to expand its digital oligopoly by claiming additional market shares in television and cable.
Instead of competition to meet the demands of the people we see companies fighting to join the circle of profitable oligopolies that already exist. As consumers spend more time online, TV’s share of U.S. ad spending is shrinking and media companies can no longer promise “eyeballs”. Advertisers have noticed the shift of consumer attention to the internet, where Google and Facebook have the vast majority of consumers. Therefore to tackle this trend, Disney is launching its own streaming services.
Disney announced its plans to withdraw its content from Netflix and set up its own on demand streaming services that will shift consumer eyeballs to its new content and gain a competitive edge. Emarket senior analyst Paul Verna believes that,
“the more desirable the content they have, the better they will be able to compete in terms of trying to sell a subscription offering at a time…”.
On the contrary, Communications scholar and Professor at University of Illinois, Urbana-Champaign, Robert McChesney believes that the global media system is “fundamentally noncompetitive” and that local traditions of cultural production are undermined by the financial interests of big media. Yes, the consolidation of Fox and Disney did pose a threat to Netflix but it also opened up a space for Disney to continue being apart of the big six oligopoly. By placing emphasis on the benefits of merging to challenge Big Tech, these articles failed to recognize that Walt Disney had already been apart of the entertainment industry oligopoly. The Disney deal is mobilized by fear, opportunity and pragmatism of the profits being earned by Netflix, Amazon and possibly Apple. Disney’s underlying motives are to benefit from assets and possibly to peak in the entertainment industry.
There is a Relationship between media consolidation and democracy since media consolidation poses a threat to democracy that holds media companies accountable to public interest and net neutrality. With this deal and the wealth of movies, TV shows and sports programming Disney provides, the company will now have a catalyst to challenge large oligopolies such as Netflix, Apple, Amazon, Google and Facebook in the fast-growing realm of online video.
In owning additional stakes in Fox, Disney will become an example for other entertainment companies to horizontally integrate in order to challenge these influential Big Tech oligopolies. According to Steven Cahall an analyst from RBC Capital Markets, “the acquisition would likely prompt other entertainment companies to join forces as a competitive maneuver”. Due to the success of the Disney-Fox merge, speculation has began to surround Viacom and CBS, who share common ownership; Lionsgate which owns Starz; Metro-Goldwyn-Mayer, who controls rights to the James Bond franchise and Sony Pictures Entertainment which has struggled with low box office market share.
Merging with fox created the opportunity for Disney to compete with the bigger entertainment streaming giants. By allowing media consolidation, the government risks having large companies decide on the fate of consumers breeding an algorithm culture than only benefits the business class. When oligopolies control the market then consumers become comfortable with the sad reality of individualism and class inequality.
The merge of Disney and Fox is an ideal example of horizontal integration in the entertainment industry and how the political economy has managed to shape this new deal as an effort to compete against big techs rather than Disney’s aim to secure its position among the oligopoly. Journalist associate the acquisition as public interest and so Walt Disney has managed to manipulate the truth by normalizing its own benefits as ‘consumerism’.
Robert A. Iger, Disney’s chief executive and chairman reveals a compelling argument in his interview with New York Times, “If they look at it from a consumer point of view, they should quickly conclude that the aim of this combination is to create more high-quality product for consumers around the world and to deliver it in more innovative, more compelling ways”.
Not only has this merge proven the influence of pre-existing oligopolies in global media but also the politics behind these big techs and organizations as identified by journalist Kashmir Hill. Unless the government implements new strategies to prioritize against merging companies that strengthen oligopolis even if they increase competition there will always be a threat to media democracy.