FBC To Stick With Entertainment Shows, Disney To Lease Fox Digs, Big Severance Packages Offered: Merger Fallout Updates

21st Century Fox employees found themselves divided today following the news of the $52.4 billion Disney-Fox deal. Some, who work for the movie and film studio, FX, National Geographic and regional sports networks, may be Disney-bound, with those who are at Fox Broadcasting, the 28 owned stations, Fox News and sports-focused FS1 and FS2, are staying put at what has been billed as “New Fox.”

While they will continue to work in close proximity — New Fox will remain based in West LA and Disney will be leasing offices on the Fox lot for the next 7 years because its Burbank facilities cannot accommodate the influx of Fox staffers that would come with the acquired assets — they will soon find themselves working for rival media companies.

The division of assets is posing two big questions for rank-and-file employees: how many of those in the units purchased by Disney will be laid off as part of the “at least $2 billion of cost savings” the mouse house boasted about today, and what the future will be for Fox Broadcasting after its separation from its main programming supplier, 20th TV.

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Both issues were addressed at a series of Town Hall meetings held at Fox today by 21st Century Fox president Peter Rice, Fox TV Group chairmen Dana Walden and Gary Newman, FX Networks CEO John Landgraf and others, according to sources.

Short-term, there will be no effect on employment, and New Fox will even need more bodies, the executives reportedly stressed, but, if the Disney-Fox transaction goes through, there will be overlaps and layoffs there, they admitted. There will be an effort to minimize staff cuts and those affected will be offered “significant” severance packages, I hear. They will be the same as the lucrative voluntary buyout packages offered to select Fox employees a couple of years ago. Now the same favorable terms will be available to all current staffers and those hired between now and the time the transaction closes, expected in 12-18 months. (Fox employees’s pension plans also won’t be impacted, they will transfer to Disney for those who will make the move.)

We also got a glimpse at what Fox Broadcasting may look like going forward, and entertainment programming — and presumably scripted series — will continue to be part of its slate, at least for the near future, according to the executives. What’s more, I hear New Fox may use some of the cash from the sale to Disney to set up a new scripted in-house studio — from the ground up or via acquisition of an indie studio like Sony TV or Warner Bros. TV — to replace 20th TV.

Rupert Murdoch earlier this morning said that New Fox “will be a growth company centered on live news and sports and the brand strength of the Fox Network… probably the strongest brand in all of television.”

Fox Network, along with its stations, are now being separated from 20th TV, which provides 70% of its programming and also dominates its development for next season. In the era of vertical integration, Fox is one of the most vertically integrated networks, with all of its new scripted this season and all but one last season coming from 20th TV.


Several current Fox series have multi-year licensing deals in place, and will stay on the network, including animated hits The Simpsons, Family Guy and Bob’s Burgers, and Fox recently renewed Seth MacFarlane’s space dramedy The Orville for next season. (The network has not yet pulled the trigger on a second season of Marvel’s The Gifted, which had been expected.)

Fox could continue to license any of its 20th TV-produced series from Disney as well as from independent studios like Warner Bros, TV and Sony TV, as well as from a new in-house production arm.

“FBC can make our own programs,” Rupert Murdoch said earlier today on an investors call. “As the networks tend to make more and more of their own programs, people like Warner Bros and Sony will be looking to us to buy programs so I think we’re in a strong position for getting all of the programs we need.”

Fox currently has three series from WBTV, Gotham, Lucifer and Lethal Weapon, with several high-profile projects in development for next season from both WBTV and Sony TV.

Given its potential new companions in the slimmed-down 21st Century Fox, Fox News Channel and FS1 and FS2, there had been speculating that Fox’s primetime may be filled with live, primarily sports programming, news magazines and possibly reality shows.

As for the current Fox TV leadership, Rice, Walden and Newman, who all have been at Fox for more than 25 years and all oversee some assets that are going to Disney and some that are staying, they all said that they did not know what their future would be.

The ever-insightful John Landgraf, CEO of FX Networks, which is being acquired by Disney, laid out his rational why the deal made sense for Disney. Pointing to streaming platforms like Amazon and Netflix that try to create one-stop-shopping for consumers, offering programming for kids, adults and families that ranges from movies to series to live programming, it makes sense that Disney is adding adult programming outlets like FX Networks to go with its mostly PG-rated film and TV offerings so they can compete in fully serving the audience, he reportedly said.

I hear Rice noted that there is a desire for Disney to keep the distinct 20th Century Fox brand going forward, to go with its other brands like Pixar, Marvel and Lucasfilms.

I hear Rice called the pending acquisition “a momentous occasion.” He said that he has been working at Fox for 30 years and never thought that Murdoch would sell. And while the Fox execs said they were shocked, Rice also admitted that he sees the opportunity for Disney to acquire attractive assets that would allow the company to compete effectively in the direct-to-consumer space.

He noted that the new Disney is projected to generate $20 million in profit a year, compared to a $2.5 billion a year loss for Netflix. New Fox is expected to generate $3 billion in business a year.

While there will be regulatory hurdles, Fox execs were optimistic that the deal will close. Regardless, they said that the Fox businesses will be run as usual with no letdown in case the transaction falls through.