Bob Iger Explains Why Disney Ultimately Decided To Buy Fox

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Bob Iger Explains Why Disney Ultimately Decided To Buy Fox

The entertainment world was in awe when it was revealed that the Walt Disney Company had been in talks to purchase 21st Century Fox from Rupert Murdoch's Fox Corporation. The awe turned to shock when the deal was done and Disney spent $71 billion to purchase the film studio and cable channels from the media company. The deal has changed the media landscape forever, but Bob Iger admits it likely would not have happened if the media landscape were not already changing, as the decision to buy Fox was entirely because of Disney's plans to launch its own streaming service.

Last week the Walt Disney Company held a grand unveiling event to show the public Disney+, the new streaming service that is set to launch in November. Included in the service will be content from National Geographic as well as many other Fox properties like The Simpsons. All this content will certainly make Disney+ a more attractive service and Disney CEO Bob Iger admits that the content was the reason Disney bought Fox. According to Iger...

We would not have done that transaction had we not decided to go in this direction. Because — if we hadn’t, we would have been looking at that business and through a traditional lens: ‘Oh, we’re buying TV channels. We’re buying more movie-making capability, et cetera.’

While buying more TV channels and movie making capability certainly has its benefit, it's not like Disney is a company in need of such things. The company's movie making arm is basically making all the money these days thanks to Marvel and Star Wars and almost every other film the studio releases. Making more money from other avenues would certainly be important, but it would take a long time for those avenues to make back the $71 billion purchase price.

However, when you add in that all of that content from those cable channels and movies will also be appearing on the new Disney+ streaming service and potentially attracting new viewers, the price begins to be paid back that much faster with every new subscription to the service. Iger tells CNBC "the light bulb went off" when it came to realizing what the Fox library could mean to the service.

When Disney revealed new Disney+ details last week National Geographic was given as prominent a place as Pixar when it came to announcing what would be available for the service. In fact, one of the original shows being produced for the service by National Geographic will follow those that take care of animals at the Disney theme parks, marking one of the first direct collaborations between Disney and a former Fox property since the acquisition.

Content is king in the streaming game and so the more Disney+ has to offer, the more subscribers it will be able to entice. The $6.99 per month price point won't hurt either.