Opinion | Disney-opoly and the streaming wars



Disney is about to close a horizontal merger deal with Fox that began in late 2017.

By Victoria Pfefferle-Gillot, Staff Writer

The Mouse House has 21st Century Fox in its sights and it’s going in for the kill. Be warned, all ye media consumers, this is not going to be pretty. Hold on to your bank accounts and thoughts of creative diversity and pray for dear life.

Disney is in the final stages of a horizontal merger deal with Fox — one that began in late 2017. The Department of Justice approved the deal at the end of June, and Disney-Fox has not faced any opposition from the foreign governments that still need to show their approval. The two studios hold a large presence in foreign film markets and both have numerous international assets. Even China, which was the biggest obstacle considering the current trade war, approved the deal without any conditions.

If I’m being honest, this deal scares me. While I absolutely love Disney and most of what it has produced, it’s dawned on me in recent years that the company feels less like a magical center of creativity and more like a capitalistic black hole — one that devours every intellectual property that makes money for it and spits out hollow, formulaic nostalgia bait.

This deal will reduce the number of large media companies in the United States from six to five, and drastically increase the amount of pull Disney gets from consumers. Through this merger, Disney will get all of 20th Century Fox’s movie studios — currently owned by 21st Century Fox — including its animation, home video and Fox Searchlight branches. Disney will also obtain all of its television studios, including channels FX and National Geographic, and Fox’s 30-percent shares of Hulu.

The deal does not include the Fox News and Fox Sports groups, which will become a part of the spin-off company titled New Fox.

If this is sounding increasingly like a media monopoly on the rise, it is. Antitrust laws exist to prevent a monopoly forming from merger deals much like this one. Around the time the Disney-Fox merger was proposed, the AT&T-Time Warner deal was rejected by the DOJ. So really, these antitrust laws should come into play for the Disney-Fox merger as well.

According to the Federal Trade Commission (FTC) website, “Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect ‘may be substantially to lessen competition, or to tend to create a monopoly.’” The agency has to ask whether the merger will “create or enhance” market power or make it easier to apply that power.

All of this is awful, but the merger deal also applies to a growing streaming war. Recall the earlier comment about Disney getting Fox’s Hulu shares. Disney already owns 30 percent of Hulu, so after the deal is done, it will own 60 percent of the company.

On top of this, Disney announced — also in 2017— that it would launch its own streaming service titled Disney Plus by the end of 2019. This platform would house an exclusive library of new and existing Disney content, including all of its subsidiaries — Pixar, Marvel and Star Wars. While not confirmed, it wouldn’t be surprising if Disney keeps its new content from going to DVD/Blu-ray to force a need for its streaming service — judging from Disney’s vault trend pushing artificial scarcity.

Disney CEO Bob Iger has said the starting price for Disney Plus will be “substantially below” streaming competitor Netflix. This alone is pouring salt into Netflix’s wounds, as Disney will pull all of its movies from Netflix before its service launches.

On the consumer side of the coin, everyone who has dipped into streaming services will be spent from having to split their attention and their funds to multiple sites like Netflix, Hulu, Amazon Prime, DC Universe and now Disney. This is without even mentioning the myriad of music subscription services and video apps like Apple Music, Spotify, YouTube Premium and HBO Now.

A lot of users are young adults, most of whom are on tight budgets and don’t want to pay for ridiculous cable costs. We’ve got crippling college debt to worry about, which is why the less-expensive streaming services are attractive. In fact, according to a 2017 Pew Research Center, 61 percent of young adults aged 18 to 29 prefer streaming services over cable or digital antenna.

Let’s assume a young college student wants access to all of the streaming services because of their vast arrays of original content. Netflix’s basic plan — one screen and standard definition — rounds out to $96 a year, as does Hulu’s basic plan.

It’s important to note Hulu also has repetitive commercials and you need to pay extra to get rid of them. If you want more screens, you’ll have to shell out upward of $25 or more on top of that. Amazon Prime Student is $59 a year with renewal charges, and $119 otherwise. DC Universe comes to $75 a year. Then add in HBO Now at $180 a year and YouTube Premium at $144 a year. All of these sum up to a whopping $650 for the whole year for this entertainment. Sooner than later, streaming services are going to be just as costly and cluttered as cable.

Disney’s involvement in the game means you’ll not only be paying it for its Disney Plus service, but also twice-over for its controlling stake in Hulu. Disney is cornering the competition in the streaming market, and its competitors are feeling the heat.

Already its plans have crippled Netflix’s Marvel TV properties, as Netflix has cancelled “Iron Fist,” “Luke Cage” and “Daredevil,” despite all three having premiered successful new seasons this year. “Jessica Jones” and “The Punisher” are expected to also be cancelled once their respective new seasons air.

While no official statement has been made regarding the rationale behind these decisions, fans and critics have speculated that strained behind-the-scenes negotiations between Netflix and Disney/Marvel — along with the steep licensing price for the Marvel heroes — was the major deciding factor.

Additionally, Netflix might be cutting its ties to the Mouse House indefinitely following Disney’s decision to pull its content from the streaming company with the intention of creating its own original series. It’s not the best business idea so far, as fans have already begun to cancel their subscriptions in protest of dropping “Daredevil.”

Marvel released a statement saying they “look forward to more adventures with the Man without Fear in the future,” but whether or not that means the cast of the Netflix show — and the others — will return in watered-down fashion on Disney Plus remains to be seen.

As a consumer and a born and bred Disney fan, I’m conflicted watching all of this drama and corporate devouring go down. I want to love the company that has produced the bulk of my childhood and young adulthood culture. On the other hand, I can’t turn a blind eye and pretend that what’s happening isn’t troubling for the media environment — one that influences us every single day. Disney will control a massive amount of what we consume, and it will wield that power to its advantage. It already has. Diverse creativity and competition will die out and we will pay for it.