Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Valuation changes associated with the FOX/Disney divestiture transaction
Issue: Vol. 12, No 2, 2019
Published date: 06-2019 (print) / 06-2019 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Bruno S. Sergi
Harvard University, University of Messina

James Owers
Harvard University, Georgia State University

Alison Alexander
University of Georgia
Keywords: Media, Restructuring, Sell-offs, Divestitures, Fox Corporation, Disney Corporation, Corporate Valuation
DOI: 10.14254/2071-789X.2019/12-2/2
Index PUBMS: adf0dac7-ad3b-11e9-bbfd-fa163e0fa1a0
Language: English
Pages: 36-47 (12)
JEL classification: Q51, L82

The purpose of this paper is to examine and calibrate valuation changes associated with the negotiating firms in a significant Corporate Control Contest and Media Restructuring. It identifies, discusses, and measures the valuation consequences for the shareholders of Fox, Disney, and Comcast of each step. In the restructuring, Mergers and Acquisitions of whole firms get most of the attention in the headlines, but often Divestiture transactions involving PARTS of firms are large and significant transactions for the firms involved. Media firms have been undertaking an extremely high level of restructuring as they work to manage the consequences of regulatory change, technological developments and their implications for the delivery of media products, and the associated changes in the competitive structure of the industry. The large scale of DIVESTITURE restructuring by media firms is illustrated by the 2018 transaction involving substantial portions of 21st Century Fox. The whole Fox company is not being sold. But in this study we document the significant value changes for the firms involved as the transaction evolved from November 2017 through July 2018. The transaction created added value for the shareholders of 21st Century Fox of $36 billion. Given that Mr. Murdock created Fox, some were puzzled that he was interested in selling such a substantial portion of the firm. His decision reflects the maxim of successful business people that “all assets are for sale at the right price.”


1. Adekola, A., & Sergi, B. S. (2016). Global business management: A cross-cultural perspective. Routledge.

2. Albarran, A.B. (2016). The Media Economy. Routledge, New York.

3. Alexander, A, J. Owers, & R. Carveth (2004). Media Economics: Theory and Practice. Lawrence Erlbaum Associates.

4. Alexander, A., & Owers, J. (2009). Divestiture restructuring in the media industries: A financial market case analysis. The International Journal on Media Management, 11(3-4), 102-114.

5. Chon, B. S., Choi, J. H., Barnett, G. A., Danowski, J. A., & Joo, S. H. (2003). A structural analysis of media convergence: Cross-industry mergers and acquisitions in the information industries. The Journal of Media Economics, 16(3), 141-157.

6. CNBC: various reports, 2017-2018 online.

7. Cuellar-Fernandez, B., Fuertes-Callén, Y., & Laínez-Gadea, J. A. (2010). The impact of corporate media news on market valuation. Journal of Media Economics, 23(2), 90-110.

8. Heffling, M. (2008, Feb. 14). DOJ approves Clear Channel buyout with divestiture stipulation. Digital Media Wire.

9. Hite, G. L., & Owers, J. E. (1983). Security price reactions around corporate spin-off announcements. Journal of Financial Economics, 12(4), 409-436.

10. Hite, G. L., Owers, J. E., & Rogers, R. C. (1987). The market for interfirm asset sales: Partial sell-offs and total liquidations. Journal of Financial Economics, 18(2), 229-252.

11. Lang, L., Poulsen, A., & Stulz, R. (1995). Asset sales, firm performance, and the agency costs of managerial discretion. Journal of financial economics, 37(1), 3-37.

12. Lowe, G. F., & Brown, C. (2016) (Eds.). Managing Medial Firms and Industries: What’s So Special About Media Management?. Springer International Publishing.

13. Owers, J. E., & Sergi, B. S. (2019). The Evolution of Financing Entrepreneurship. In Entrepreneurship and Development in the 21st Century (pp. 161-170). Emerald Publishing Limited.

14. Owers, J., & Alexander, A. (2011). Market reactions to merger, acquisition, and divestiture announcements in the media industries. International Journal on Media Management, 13(4), 253-276.

15. Peltier, S. (2004). Mergers and acquisitions in the media industries: Were failures really unforeseeable?. Journal of Media Economics, 17(4), 261-278.

16. Sergi, B. S., & Scanlon, C. C. (Eds.) (2019). Entrepreneurship and Development in the 21st Century. Bingley, UK: Emerald Publishing.

17. Sicherman, N. W., & Pettway, R. H. (1987). Acquisition of divested assets and shareholders' wealth. The Journal of Finance, 42(5), 1261-1273.

18. Telecommunications Act of 1996. Pub.L.No. 104–104, 110 Stat. 56, Amending Communications Act of 1934. 47 U.S.C.A. 151 et. seq. (West 2201 & Supp. 2004).

19. Wall Street Journal, various issues, 2017, 2018.