Front Burner - Why Disney Absorbed Fox, Apple Wants to Make TV

Episode Date: March 27, 2019

After the merger of Disney and Fox, one movie studio controls almost 40% of the box office. The merger puts Disney in a position to compete with big tech companies like Netflix and Apple in the streaming game. But is it good for moviegoers and TV watchers? Film critic David Sims says 'bigness' can lead to bad outcomes for less profitable content like local news and art movies, but will increase our diet of superhero blockbusters. "It seems that these companies that have always existed in the movie business are looking at this industry and saying, we can only make a few kinds of movies anymore that can make money," says Sims.

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Uncover. The Village. Coming April 2nd. Hello, I'm Jamie Poisson. Okay, so imagine you're in Disney World. You're walking around and there's Mickey Mouse. Hi, everybody! Oh, and Minnie and Goofy are there. You know, the classics.

Oh, of course. Then you walk a little further, and it's a guy dressed like Luke Skywalker and Woody from Toy Story. Because, of course, Disney owns Star Wars and Pixar. You keep going. It's the Avengers. Iron Man. Spider-Man. Because Disney owns Star Wars and Pixar. You keep going. It's the Avengers. Iron Man.

Spider-Man. Because Disney owns Marvel. Bought them in 2009. Then you turn a corner. There's Homer Simpson. And Deadpool. The alien from Alien is there. He's hanging out with Mrs. Doubtfire.

Oh, and the volleyball from Castaway is there too. You see, Disney merged with 20th Century Fox last week, so they own all those characters too. Combined, this new company has almost 40% of the box office. They pretty much own your childhood. It looks like we're heading towards a world where there are three or four big media companies that control just about everything. There was news this week that Apple is starting its own TV and movie streaming service. So what does this mean for you, a person who watches TV and movies? I'm joined today by David Sims. He's the film critic for The Atlantic, and we're going to talk about this new

bigness happening in media. That's coming up on FrontBurner. David, thank you so much for joining us today. Thank you for having me. Can we go over what Disney owns? Yeah, so 20th Century Fox, they got the studio, the movie studio, and all of its archives. It's an 85-year, something like that, history of cinema, all the media properties it owns, so things like the X-Men, the Fantastic Four, Avatar, all that stuff. They got the TV studio.

So that's where you're getting The Simpsons, things like that. They got some channels like FX, National Geographic. They own most of the streaming service Hulu and Fox's sort of specialty prestige movie branch, Fox Searchlight. They got all of that. Can we talk about why Disney would want to pursue this? It's sort of a two-fold question. There's this question of Disney's big brands like Marvel and Star Wars. Fox has some stuff in its library that sort of helps you add to that. It beeps up the Marvel world. It's what fans have been waiting for ever since they heard the first inklings that Disney would be acquiring 21st Century Fox. It gives you these big tent poles like Avatar that you can sort of use to basically always have a giant event happening in theaters at all times. But then there's also Disney's pretty fair concern over the rise of Netflix and of streaming

services and its need to have a very like sort of beefy competitor online to draw people on in the sort of subscription world as well. And Fox has this television library, it has this big movie library, it has things like that. They're going to help you offer a very comprehensive service that could rival what Netflix is trying to do. And so can we unpack that a little bit? The idea here is that Disney is soon going to start a streaming service. Yes, called Disney Plus. Okay. And they may start other things too. This is the one thing they've announced, which is going to be some kind of per month subscription, much like Netflix, that'll have movies you recognize and stuff from the old days that you know, but also new

shows and movies that are exclusive. It seems that all of these very big companies that make very successful movies and have been around for decades are looking at the media landscape and thinking like the only way to survive or to challenge these newer companies is to get as big as possible. And Fox, I think domestically, had about 9% of the theater audiences last year in terms of like ticket sales. It itself is big. And yet I think in boardrooms, that's just not going to be enough anymore. of the theater audiences last year in terms of ticket sales. It itself is big. And yet, I think, in boardrooms, that's just not going to be enough anymore. In the future, you're just going to need such epic scale to continue to get that sort of profitable foothold. And to go up against the Amazons, the Google, and the Netflixes of the world.

These tech companies that have just sort of, not bottomless, but almost bottomless bank accounts, and they can just sort of throw money at quote unquote content, you know, original TV, original movies, anything they can sort of acquire or produce themselves, push out to subscribers to sort of build out like a loyalty base. Right. The obvious question here is, is this illegal? How did this merger even go through? Because, you know, you could see an argument for how this would violate U.S. antitrust laws.

You know, I was actually doing some research trying to see if there's some sort of defined threshold for when you've got too much of one business. There isn't. It's not like there's a law that says, like, if you've got more than half, then that's it, you're in trouble. But I think that the way that they're getting away with this, if that's how you want to put it, the way that this is sort of getting approved around the world, not just in America, it needs to be approved in places like India,

is that they don't own the theater chains and they don't own the television company, the people who make TVs, things like that. The classic Hollywood antitrust case, which I think was back in the 40s, Paramount versus the U.S., was the big Supreme Court case. That was because studios had this vertical integration where they had the studios, they would make the movies, they owned a lot of the movie theaters, they would release the movies. Everything was just sort of under one silo. And that's where the government intervened to sort of break things up because they could kind of set the price of everything. And this is different because the supply chain is essentially broken apart. Yes, I think that would probably be the

argument. And Disney in and of itself was already this massive thing. It had about 25, 30% of ticket sales, which was already kind of unprecedented. That had never, in the history of Hollywood, the studios were much more evenly split. They'd be making maybe 15% of ticket sales. Like, you know, this sort of quote unquote big six studios were always sort of on an even footing. So there had already been this like growing disparity.

And now with Fox, it does make it more pronounced. So if there's some challenge to be mounted in the future, you know, I'm not sure how that comes about, but it's certainly not impossible. And just when I was getting ready for this conversation, I looked up the company's profits in 2016. So before they bought Fox, we're talking $2.5 billion in profit. before they bought Fox, we're talking $2.5 billion in profit. And Disney essentially made five of the 10 most successful films of the year because they own Marvel and Pixar and Lucasfilm as well. Can we deal with sort of a sidebar issue? You know, when people hear the word Fox, they think about Fox News.

Good evening and welcome to Tucker Carlson Tonight. There is a loud debate going on in Washington right now. And Fox News is being left out of this deal, correct? Yeah. The things that are remaining, I think what's now being rebranded as the Fox Corp, is like the Fox channel, the terrestrial network, Fox, and Fox News, and the Wall Street Journal, and a lot of the other media properties like that, and like Fox Sports. Because I think there's one issue is that Disney is definitely not allowed to own two networks. They already own ABC. They're not allowed to own another sports network.

They already own ESPN. And with Fox News, I think the Murdochs were always going to keep hold of that. It's a very profitable company. It's sort of the dominant cable news player in America. And I don't think that was really ever on the table in the deal. The thing that the Murdochs and the Fox company was sort of looking at with a little bit more dismay or a little bit more fear about the future was the movie business, the entertainment business in general.

And I mean, obviously, this deal has gone through with Fox. But do we know why they're allowed to buy 20th Century Fox, even though they already own all these other movie studios, Lucasfilm, Marvel Studios, Pixar, but they can't get Fox Sports Divisions or Fox News because they own ESPN and ABC? These sort of seem like the same things. I know. And it's a fair question. There's very strict rules about broadcast in general in America because of the sort of laws that govern like what is allowed to be on television, how these networks work. I think it's all rooted in that. There's literal just sort of codified stuff saying you

cannot own two. There's only five major networks. You can't own two of them. And you're making a fair point in that there's really only six major studios, and now Disney owns two of them. So the sort of way to counterbalance that that Disney would probably point out is at this point Netflix is kind of a studio unto itself, and you have players like Amazon and even Apple are sort of entering the field as well. So does it sort of shake out the same way? Right. Is it all evening itself out?

Right. That's an interesting segue to talk about what this means for the movies that we love. Either these big blockbusters or sort of smaller, more independent films. How does this affect what I'm watching? If you're going to a theater, the trend lines will keep pointing in the direction they've been pointing for the last 10 plus years, which is that the theater is going to be so dominated by these giant event pictures

that are often interconnected. Superhero movies, Star Wars movies, things like that. Like the Avengers universe. Right. The opposite of that is it is actually, there's a lot of independent studios now. There's a lot of ways to get an independent movie out including through netflix or just online you know there's a little more of

a playing field going on there the thing that's kind of been lost is that middle type of movie the sort of film that might cost like 20 to 60 million dollars might be like a drama romantic comedy have slightly less high stakes less of a high. That stuff is less and less in cinemas and more and more just showing up on television. Obviously, there's so much more television than there used to be. That's sort of where those creative outputs are getting diverted to. Can you give me some examples of that, these sort of middle projects? When you sort of look at old box office charts from the 90s even, you don't even have to go back that far.

And you see the sort of John Grisham legal dramas. Your law firm is the sole legal representative of the Moraldo crime family in Chicago, known as the Mafia, the mob. I don't believe it. Often in like the top five movies, something like that, or like a romantic comedy like Pretty Woman or... Right. It's one of my favorite movies of all time.

Absolutely, yeah. No, I want to find Beverly Hills. Can you give me directions? Sure. For five bucks. Ridiculous. Precious, when I was ten. You can't charge me for directions.

I can do anything I want to, baby. I ain't lost. You can't charge me for directions. I can do anything I want to, baby. I ain't lost. It's not that you can't release a rom-com or a drama or a horror movie, something like that, that wouldn't cost as much as a superhero movie. You can release those and you can make a killing, you can make a huge profit. But studios seem more and more interested in very big hits that can play to a global audience gross in the billions

of dollars, move the stock needles, and not only that, but feed into future franchises and sequels and things like that. So you have this sort of perpetual like audience loyalty thing. Is it possible that some of these big tech companies will fill that void? It really, Netflix already is filling that void. Like a lot of Netflix's big movies are romantic comedies, are sort of Oscar-y dramas. Like last year, the big Netflix movies, they had things like Roma and The Ballad of Buster Scruggs that were, you know, made by these big time serious directors and that were competing for Oscars. And then they had stuff like To All the Boys I Loved Before set it up that were like huge word of mouth hits that were there for an audience that have been maybe a little starved of good teen dramas and good comedies and good rom-coms and things like that because they're not being made by big studios as much anymore.

You guys know each other? We're friends. That's nice. Why'd you say it like that? How'd your voice go up? Why'd you say it like that? How'd your voice go up? If you had to pick whether or not this merger was a good or bad thing,

which side would you fall on here? Like, should we be sad that these movies are showing up on Netflix, but they're just not in theaters? I mean, that's sort of a whole question unto itself. I definitely wrestle with it. I do think for movies, being locked in a dark room with an audience and having this collective experience with a film you can't take your eyes off of and you can't check your phone, you can't pause it, you can't look at your emails, whatever, is a special thing and it's worth preserving.

And the sort of Netflix versus theaters debate continues to rage as to what the compromise can be there if there is one. I was just going to say say i was in theaters last week i hadn't been in such a long time but i saw captain marvel i'm not gonna fight your war i'm gonna end it you know i got popcorn and i was just a good friend of mine and it reminded me how much I enjoyed that experience right and obviously the appeal to everyone not only people you know people who are maybe further from a theater but even people in big cities of being able to just turn on your tv go to Netflix they've got a big movie for you this week to watch with big stars this week they had triple frontier you know this big action movie with Ben Affleck and Oscar Isaac. What's the plan here? We're going to get that money back over that mountain to the ocean. Benny, cover us from under that tree line there.

Fish, you take a position up there. That's cocaine they're growing, so they may have weapons trained on us from those buildings right there. That's obviously a very valuable service that's sort of hard to discount. It's just how it all sort of merges together in the future is very murky. And that's why Disney is looking at Fox and being like, we need as much skin in the game as we can get. We really need to just bulk up as much as possible to sort of take on that kind of experience that Netflix is offering. It seems that these companies who've existed in the movie business as long as there's been a movie business, basically, It seems that these companies who've existed in the movie business as long as there's been a movie business, basically, are looking at the industry and saying, we really just can make, we can only make a few kinds of movies anymore that are going to make money.

Are they right? Who knows? Like, and will companies like Netflix rush in to fill the void? Probably. I mean, so far that seems to be happening. I mean, that is clearly the direction that it's headed. It does strike me, the media landscape in the United States is becoming more and more concentrated as time goes on. It's not just this recent merger, the AT&T Time Warner deal, NBC Universal and

Verizon's union. There's also AOL and the Huffington Post. What is your sense of the effect that this has on the media landscape in the United States? And I think we could go even as far, what effect does this have on democracy? There's this economy of scale that everyone seems to be prioritizing, which is never good for local news. It's never good for like...

Arts films. Exactly. Things that are maybe aimed at more niche audiences. That's not to say these things don't exist. And again, the internet does provide a sort of new route for those things to exist. It sort of bypasses the big companies. But in terms of, you know, where can you go to get someone to maybe underwrite a more ambitious project? Or to provide a service that maybe doesn't like

make a huge profit all by itself, something like the local news, right? You know, that's a very valuable and necessary service, but is not going to, you know, please shareholders in the same way. It'll be harder and harder as all of these companies get bundled into these giant sort of tech conglomerates, which seems to be the scenario that's unfolding. After we first talked to David, some news broke. On Monday, Apple announced it was creating a streaming service called Apple TV+. We've partnered with the most accomplished storytellers,

as well as a new generation of the most exciting voices who together will define Apple TV Plus as the destination for the highest quality originals. From documentaries to dramas, from kids to comedies, the highest quality of storytelling in one single place. This is Apple TV Plus. It's going to have original shows from many famous people like Oprah and Reese Witherspoon and Jason Momoa.

So we called David back to talk through this news. First impressions, what is Apple TV Plus offering? So my impression from the keynote they had, which was very heavy on the big talent they've signed that they brought aboard for these shows and very light on like details, you know, not a lot of clips for these shows, and very light on, like, details. You know, not a lot of clips from the shows, just no details on the pricing. So what I took away from all that was they're really angling for, like, a prestige option, like a prestige play. Like, they're not coming out here and saying,

we're going to be the new Netflix, we're going to be your number one place to go for streaming television. They're saying that we're going to be this like high quality option that makes really alluring television and maybe movies with big stars and really notable people. That's why it'll be worth whatever fee you're going to pay. Right. You know, you said that this isn't like Netflix. Is it also not like the Disney Fox merger in that they just won't have this breadth of options?

It's possible they're trying to have so much to offer viewers that you kind of can't say no. Whereas Apple's not going to be able to do that. They don't own a movie studio. They don't have any kind of film archive or TV archive to go through. So Apple has offered very high-quality products that are quite expensive. It's not too surprising that their foray into the media is going to be sort of similar. Right. It is very on brand for them.

Yeah. Right. It's a little fancier, but it's high reputation. You know, like Steven Spielberg, Oprah Winfrey, you know, Reese Witherspoon and Jennifer Aniston and Steve Carell back in a TV show. You know, these are prestige plays, I feel like. And there's all this sort of rumor swirling around HBO because HBO was part of AT&T's acquisition of Warner Media.

And that AT&T is sort of saying to HBO it's time for HBO to be a little more like Netflix, to make more stuff, to be a little less bespoke and more, you know, like, you know, pump things out a little quicker. HBO's sort of long-running president has stepped down.

HBO might, their whole prestige operation might kind of be on the way out anyway. So maybe Apple is sort of seeing an opportunity here to kind of nudge in and be like, you know, we can be the high quality option. Of course, they're going to need the shows to be good. And that's obviously the thing that's very mysterious. You know, it's so interesting when we talked to you the other day, we sort of talked about how, you know, the big studios are no longer making these middle-of-the-road productions anymore. They're focusing on the blockbusters, these superhero movies because that's where the money is for them. And then we talked about how Netflix maybe stepped in and filled that role a little bit.

I can't help but think listening to you now, it's like every time there's an opening, someone else steps in. So now Apple is going to step in and take over what HBO has been doing for several years. Maybe. I mean, it's sort of anyone who's stepping in is very deep pocket. You know, it's like Apple has the resources to throw at this. And if it doesn't work out, it's not the end of the world. Obviously, Apple has a lot of other revenue streams, so it's not going to all be in on whether they can convince people to do a streaming platform.

It sort of backs up that idea that, like, only the biggest companies in America now are going to be the purveyors of, like, news and media. Right. Colossal conglomerates that are much bigger than even the big companies that did this stuff for us in the past. The last question and maybe the most important for a lot of people is, you know, how much is all of this going to cost? You know, Netflix is already $10 a month and now we've got Disney as an option. Yeah. Plus is an option to watch this stuff. How much am I going to be paying every month? I know.

That is a huge question because whatever the streaming budget is, it's going to start to resemble your old cable bill with all these services you're adding. Right. Or even more, possibly. Right. Right. Thank you so much for taking us through this. Really appreciate it. Happy to. Thank you so much for taking us through this. Really appreciate it. Happy to.

So I don't know about you guys, but I'm going home to evaluate my cable bill. That's all for today. I'm Jamie Poisson. Thanks for listening to FrontBurner. for listening to FrontBurner. For more CBC Podcasts, go to cbc.ca slash podcasts. It's 2011 and the Arab Spring is raging.

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