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Disney
buying
Fox Family Channel
Deal will
strengthen portfolio of cable holdings
By Jeff Bercovici
One of the
nastier marriages in cable is coming to an end, and in the process the
television franchise that is Disney is about to become even more
omnipresent.
As early as today, Disney is expected to acquire
Fox Family Worldwide for $3.2 billion from News Corp. and Saban
Entertainment.
The U.S. channel, Fox Family, will be renamed ABC Family and will
become an outlet for reruns of shows on the Disney-owned ABC broadcast
network and other Disney entertainment properties, among other offerings.
Disney sees the acquisition as a means of beefing up its
portfolio of cable networks, which includes ESPN, the Disney Channel, and
interests in Lifetime, E! Entertainment Television and A&E.
But it also sees an opportunity, through
use of its programming, to restore luster to the ailing Fox Family
channel, which has seen its ranking slide to 17th from 10th as a result of
an increasingly competitive race for younger viewers and the bickering
over ownership between News. Corp. and Saban.
Among other advantages, the deal will strengthen Disney's position
with younger viewers against the continuing age erosion of broadcast
viewership. ABC has been especially affected over the past season with the
aging viewership of its hit show "Who Wants to Be a
Millionaire."
In the U.S., Disney will gain 81 million cable viewers,
representing a substantial new base of viewers for its cable franchise.
Though Disney is believed to be paying dearly for the network, the
deal is being looked upon by analysts as a shrewd investment on the part
of CEO Michael Eisner. It is a way to add new means of distribution in an era
of consolidation of major distribution providers such as AOL Time Warner.
Globally, Disney will pick up some 34 million
viewers across 50 countries--24 million in Europe and another 10 million
in Latin America. It will also acquire the publicly held Fox Kids
Europe.
One report speculates that Disney will convert the
international channels to Toon Disney, a three-year-old cartoon network
with 15 million subscribers in this country.
Not in the deal is the U.S. edition of Fox Kids Network,
which Fox will control through a buyout of Saban's interest.
Disney officials are not publicly commenting on any aspects
of the deal, but privately the company appears to have been busy through
the weekend stoking the nation's business press with stories of the
acquisition and the benefits it will bring to Disney.
Disney's stock has
taken a beating amid rising criticism of Eisner for his management of the
company and his failure to join the consolidation race.
The deal brings to an end a bitter five-year partnership
between Haim Saban, the cartoon marketer behind "Mighty Morphin Power
Rangers," and News Corp.
At least for News Corp the timing--and
cash--couldn't come at a better time, as the media mogul is attempting to
gain control of DirecTV, the satellite operation, through the
acquisition of General Motors' Hughes Electronics.
The partnership between Saban and Fox was originally intended
as a counterstrike against Disney and the WB and their increasing strength
in the children's TV market.
The two joined to buy the International
Family Channel from evangelist Pat Robertson in 1997, but the two sides
squabbled over strategies, among other issues, and ratings tumbled. Only
this year has the network seen those losses reversed.
Last year, Saban opted to force News Corp. to sell its
interest, but the sides could not agree on a value, and they ultimately
decided to sell out entirely to a third party.
July 23, 2001 ? 2001 Media Life
-Jeff Bercovici is a staff
writer for Media Life.
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