Fox Gives Disney Muscle for Next Net Fight

Two big earthquakes shook the media industry Dec 14. They are not directly connected but will combine to reshape the industry’s landscape. Net neutrality, the idea that internet distributors should not discriminate between different kinds of content, was voted out. The dramatic deal between Walt Disney Co. and 21st Century Fox, inked on the same day, should be seen at least in part as a response to this. It also makes more deals likely. Rolling back net neutrality should favor the cable and wireless companies that distribute content over the internet and could hurt the movie and TV studios that produce the content. Mergers offer companies on both sides of the debate ways to improve their position. One is vertical combinations such as the proposed AT&T-Time Warner deal, or the earlier merger of Comcast and NBCUniversal. In theory, distributors could prioritize the content they create over rivals’ material. The other option is a horizontal deal between content providers, like the Fox-Disney deal. Getting bigger as Disney is doing gives the content creators improved leverage to negotiate favorable distribution terms with cable and wireless companies.