Disney closes its $71.3B Fox acquisition

As of 12:02am Eastern today, Disney has closed its acquisition of 21st Century Fox .

The goal of the enormous acquisition is to help Disney position itself for a streaming-centric future. The company has already taken a step in that direction with the ESPN+ streaming service, and it has plans to launch another service called Disney+ later this year, which will include new shows based on the Star Wars and Marvel universes, as well as Disney’s entire movie library.

With the Fox acquisition, Disney has even more films, TV shows and intellectual property to draw on — as indicated by the redesigned lead image on the on Disney corporate website, which now features “The Shape of Water,” “Avatar” and “Deadpool” (all Fox films), as well as “The Simpsons” and “Atlanta” (which are produced by Fox studios and air on Fox networks). It also becomes the majority owner of Hulu, with CEO Bob Iger (pictured above) saying that Disney will invest in more original content for Hulu and help it expand internationally.

In addition, the deal solidifies Disney’s already-dominant position in Hollywood — seemingly the one studio that can still reliably draw massive audiences to movie theaters. Thanks to its previous acquisitions of Marvel and Lucasfilm, Disney has had the number one movie at the worldwide box office for each of the past four years, and in 2018, it released all of the top three films, while Fox had two movies in the top 10.

Even after Disney won its bidding war with Comcast last year by making an offer of $71.3 billion, the deal has still taken nine months to gain all the necessary regulatory approval.

Meanwhile, Fox’s news and sports divisions — including Fox News, the Fox broadcast network and Fox Sports — have a spun out as a new Fox Corporation, and the acquisition is expected to result in more than 4,000 layoffs.

“I wish I could tell you that the hardest part is behind us; that closing the deal was the finish line, rather than just the next milestone,” Iger said in a staff memo. “What lies ahead is the challenging work of uniting our businesses to create a dynamic, global entertainment company.”

James Gunn is back at the helm of Guardians of the Galaxy 3

In a rare turn, director James Gunn is once again heading up up the third installment of Marvel’s Guardians of the Galaxy series. Gunn, who directed the previous two films, was fired over the summer when offensive tweets dating from between 2008 and 2011 resurfaced after being promoted by right-wing personalities like Jack Posobiec and Mike Cernovich.

The news comes courtesy of Deadline, who has since confirmed things with both Marvel and Gunn’s representatives. Gunn addressed the firing on Twitter in July, apologizing for “shocking jokes” and noting that he “viewed [himself] as a provocateur” at the time, but had since changed his ways. Gunn appears to have stopped tweeting altogether since that apology thread.

Marvel/Disney parted ways with Gunn, but reportedly never chose a successor the project. The director, meanwhile, agreed to take on the second Suicide Squad film for DC/Warner. He will return to production on the new Guardians after completing the sequel to that less critically beloved series.

While the content of Gunn’s off-color jokes have been roundly denounced from both sides of the political spectrum, Guardians cast members including Chris Pratt, Zoey Saldana, Vin Diesel and Bradley Cooper penned an open letter asking the studio to reinstate him for the third film.

Disney says Fox acquisition will close on March 20

More than a year after the deal was first announced, it looks like Disney’s acquisition of 21st Century Fox is about to close.

Disney announced today that the deal is “expected to become effective at 12:02 a.m. Eastern Time on March 20, 2019,” suggesting that it has obtained the final approval needed, specifically from regulators in Mexico.

Disney had initially agreed to acquire Fox for $52.4 billion, before a counter-offer from Comcast prompted it to increase its bid to $71.3 billion.

The acquisition will see Disney buying Fox’s film and television studios, giving it control of the “Avatar” franchise and the film rights to a number of Marvel characters, including the Fantastic Four, the X-Men and Deadpool. It will allow Disney to double its stake in Hulu, from 30 to 60 percent.

Bringing the two entertainment giants together is also expected to lead to more than 4,000 layoffs.

Meanwhile, Fox News, the Fox broadcast network and other assets that Disney is not buying, are being spun out into a new entity called Fox Corporation.

Captain Marvel rakes in $455 million in worldwide weekend haul

Captain Marvel, the latest superhero film from Disney’s Marvel franchise, is bringing home the bacon — to the tune of a $455 million box office total for the weekend.

The movie, Marvel’s first to be headlined exclusively by a female superhero, is off to the second largest global opening of any superhero movie behind Avengers: Infinity War and the sixth best global box officer premiere of all time.

The film’s success shows (again) that when under-represented demographics get their due in solid entertainment outings, audiences will respond by opening their wallets and shelling out the cash.

Marvel’s highest grossing movie to date for the U.S. box office is Black Panther, which raked in a whopping $700 million in movie theaters across North America.

Captain Marvel’s soaring numbers come despite mixed reviews from critics (like our own Anthony Ha) who called it “a fine but underwhelming debut for Brie Larson’s superhero.”

With the new release Marvel seems to also be consistently reducing the gender gap among audiences for superhero movies. Captain Marvel ranks alongside Black Panther and Ant-Man and the Wasp for having the smallest gender divide among audiences for films in the Marvel Comics Universe franchise, with a weekend crowd that was 55% male and 45% female, as Box Office Mojo reports.

The results also could mean good things for the Disney+ streaming service, which is counting on the Marvel and LucasFilm franchises to power subscriptions (take my money already).

Plans are in the works for a series starring Tom Hiddleston as Loki (the complicated villain/anti-hero from the Thor and Avengers movies) and Marvel executives have teased that characters from the now-defunct Netflix/Marvel deal for characters based on The Defenders team (Daredevil, Jessica Jones, Luke Cage, Iron Fist — and tangentially The Punisher) may appear in some form in the Marvel Cinematic Universe down the road.

Captain Marvel, meanwhile is set to become the first movie to stream exclusively on the Disney+ service.

Report: Disney in talks with AT&T to buy WarnerMedia’s 10% Hulu stake

Disney is in discussions to buy AT&T’s 10 percent stake in Hulu, which it comes into by way of its WarnerMedia acquisition, according to a report from Variety this morning. The news is not surprising – AT&T had already said it was exploring a sale. And Disney has been looking to increase its stake in Hulu following its deal for 20th Century Fox which, when closed, will see Disney picking up Fox’s 30 percent share in Hulu.

Currently, Disney owns a 30 percent stake in Hulu’s streaming service. That means the Fox deal will give it a 60 percent stake in Hulu. Snagging AT&T’s Hulu share would bring Disney’s ownership to 70 percent.

Comcast/NBCU is Hulu’s other major owner, but isn’t currently prepared to sell, Variety said.

AT&T had detailed its streaming plans to investors in November, noting at the time it was thinking of selling its Hulu stake as part of its larger goal to “monetize assets” that were not essential to its current strategies and to help pay down its debt. Its Hulu share is valued at $930 million.

AT&T has little interest in Hulu because it’s building out its own internet-based streaming services, including live TV service DirecTV Now; the more lightweight WatchTV; and a new service that leverages its WarnerMedia properties. WarnerMedia also today operates streaming services for its brands, like HBO NOW, Boomerang, DC Universe, and others.

Disney, meanwhile, is preparing to launch its family-friendly Netflix competitor, Disney+, but sees Hulu as a place to house its more adult-oriented programming and general entertainment properties.

Hulu today has 25 million subscribers, but is still a smaller player compared with Netflix because it’s not yet available worldwide. It also hasn’t invested into original programming at Netflix’s scale. Disney’s increased ownership will change these things and could help Hulu compete on the market against larger rivals like Netflix, AT&T/WarnerMedia, and soon Apple, as well.

New trailer for Dark Phoenix doesn’t bode well for the X-Men

The latest trailer is out for what could be the final installation in this iteration of the X-Men franchise — and things don’t look great (either for our heroes or for the franchise).

The Dark Phoenix saga is one of the most famous (and well-loved) narrative arcs in the comic book series long history, and one that would always prove tricky to reproduce on the big screen.

Setting aside the split over the rights to the franchise (which was owned by Fox, while Disney owned the rest of the Marvel Cinematic Universe), the Phoenix saga in the comics depends heavily on some plot elements that have yet to be introduced to the MCU.

Fox is only getting this second shot at recreating the storyline because the first time it was attempted it was a colossal mess.

After two strong showings (both creatively and at the box office), Fox’s latest foray into the wild world of the Uncanny X-Men team hit a stumbling block with the messy and misguided “Apocalypse”.

There’s still the individual narrative arcs of characters like “Logan” and “Deadpool”, which were both successes at the box office.

However, the franchise needs a good box office showing to sustain it. At least it has the beyond stellar cast of James McAvoy as Professor Xavier, Jennifer Lawrence as Mystique, Michael Fassbender as Magneto, plus “Game of Thrones” star Sophie Turner, who’s returning as Jean Grey.

Baidu’s video site iQiyi adds 37M subscribers in 2018 amid mounting losses

China’s Baidu, which is often compared to Alphabet’s Google, is showing no signs of slowing down its pace of betting on video content as its core advertising unit feels the squeeze from rivals. The company’s latest financial results show its video streaming business iQiyi posted a net loss of 9.1 billion yuan or $1.3 billion in 2018, compared to just 3.74 billion yuan in 2017.

Not long ago, iQiyi announced raising $500 million in convertible notes to fuel its spending spree. The video site, which filed for a $1.5 billion U.S. IPO last February, aspires to be the “Disney of China” with a Netflix-style production house and a plan to merchandise a library of intellectual property. Baidu also felt the heat as content costs from 2018 jumped 75 percent to $3.42 billion mainly on account of iQiyi expenses.

The cash burn appears to be paying off. IQiyi added 36.6 million subscribers last year, bringing its total users to 87.4 million. 98.5 percent of them were paying, a promising ratio given Chinese users were long used to getting free content in a country with rampant online piracy. IQiyi’s most serious contender Tencent Video had 82 million users as of Q3.

2018 also turned out to be the first time Baidu has crossed the 100 billion yuan earnings mark as the firm pocketed 102.3 billion yuan ($14.88 billion) in total revenues, an increase of 28 percent from 2017.

In Q4 alone, Baidu’s total revenues grew 22 percent to $3.96 billion at a slower rate compared to the previous quarter. Online advertising from search results, news feed and video content still made up the majority of the company’s income despite the considerable resources the behemoth has poured into autonomous driving and other AI-focused efforts.

Meanwhile, Baidu’s lucrative advertising business is facing heightened competition from ByteDance, the fast-ascending new media company with a suite of news and video apps that are proven popular with marketers. The Beijing-based firm that’s also unnerved Tencent was expected to achieve $7.4 billion in revenues last year, Bloomberg reported citing sources.

To fend off attackers, Baidu has broadened its advertising inventory beyond the web to include the likes of elevators. In another move, Baidu paid $133 million in cash prizes luring users to its namesake search app on the eve of Chinese New Year. But its search service has over the years been a repeated target for criticism on issues ranging from false medical ads to more recently the subpar quality of its search results. Baidu has nonetheless held onto its commanding position in a market where Google is absent and smaller players like Bing and Sogou remain the underdogs.

On the AI front, Baidu made a total of 13 investments in 2018 that made it the most prolific corporate venture capital focused on the realm, according to a report from CB Insights. Microsoft’s M12 venture and Google Ventures followed closely behind.

Though Baidu’s AI business is far from achieving mass commercialization, the segment has scored some notable landmarks. Over 200 million devices now use DuerOS, the company’s answer to the Alexa voice assistant. Baidu’s autonomous driving open platform Apollo has accumulated 135 original equipment manufacturers (OEMs) including Volvo, which is working with its Chinese ally to deliver level four self-driving passenger vehicles that can operate on pre-mapped roads with minimum human intervention.

Chinese e-commerce challenger Pinduoduo is raising over $1 billion more

The price of competing with e-commerce giants Alibaba and JD.com is immense. That’s evidenced by challenger Pinduoduo, commonly known as PDD, which is raising more than $1 billion in fresh capital just six months after it went public.

The company announced plans to sell 37 million shares in a move that will raise over $1 billion, going potentially as high as $1.25 billion if underwriters exercise their full share purchase option. The secondary event will also see a number of existing backers sell a portion of their stock, those sellers including Sequoia China, Lightspeed China and Banyan, according to a filing.

PDD went public in July when it raised $1.6 billion through a Nasdaq listing.

Founded in September 2015 by ex-Googler Colin Huang, it adds a social twist to e-commerce by offering discounts for shoppers who gang up with friends or family to make group orders. That’s resonated in particular with consumers, who tend to be female, the company said. PDD claims 385.5 million active buyers with an annual GMV of RMB 344.8 billion, or $250.2 billion, as of Q3 2018.

That’s helped it make a dent in China’s e-commerce market, which is dominated by Tencent and Alibaba, although it has come at some cost. PDD isn’t profitable, and it isn’t likely to be for some time. Since going public, it has recorded net losses of RMB 6.49 billion ($981.4 million) in Q2 and RMB 1.10 billion ($159.9 million) in Q4.

Yes, there has been heady growth, revenue in Q4 surged by 697 percent year-on-year to reach RMB 3.37 billion ($491.0 million), but the corresponding operating loss increased five-fold.

Huang has described his business as a combination of Costco and Disney, which signifies “value-for-money and entertainment combined.” In a letter to shareholders, he emphasized that his vision will require a decade before it begins to reach its potential.

“It is not easy to take the leap of faith believing in such an unconventional company, which strives to meet both economic and social needs of users, and to make a positive impact to the society. The pursuit and focus of our long-term vision and intrinsic value may not always translate into near-term profits. Instead, we hope to show you the true colors of our company no matter how bumpy or rough the numbers may seem to be. We ask you to ride the journey with us for the long term. We believe it will be wonderful,” he wrote.

LittleBits lays off employees as it shifts focus toward education

New York City open-source maker startup LittleBits began to lay off staff last month, TechCrunch has learned. The loss of jobs comes as the company looks to shift more focus toward the K-12 market.

Education-specific offerings have been lucrative for the company in its eight-year existence, but recent products have found the company embracing licensed products, courtesy of its involvement with Disney’s hardware accelerator.

LittleBits confirmed the layoffs as part of an internal restructuring, in a statement offered to TechCrunch.

“The true potential that littleBits provides teachers, parents, and the children is far beyond your standard ‘off the shelf’ gift or toy. In order to have the greatest impact in shaping the next generation of Changemakers, we are prioritizing our business around the K-12 education market,” the company says. “As you can imagine, the education market’s needs are vastly different than that of retail. Given this, we had to re-shape our internal structure, which ultimately led to a reduction in staff.”

It has yet to offer a specific number, but TechCrunch believes the number to be around 15. Not huge in the grand scheme of things, but no doubt a hit to a staff of this size, which numbered around 100, after its acquisition of DIY Co, last summer. That acquisition, LittleBits’ first, will no doubt play a role in the restructuring, going forward.

It’s hard not to see echoes of the difficult decision Sphero made roughly this time last year. The robotics startup went all-in on licensed Disney brands like Star Wars and Marvel, but ultimately pivoted to an education-only focus, after a disappointing holiday season. Education, on the other hand, can prove a lucrative and stable path forward, as schools and districts tend to buy products in bulk. 

Another thing both Sphero and LittleBits have in common is a knack for truly innovative tech products that could do extremely well in the educational space with the right positioning.

Thanks to Hulu, Disney lost $580 million last fiscal year

The streaming media business is tough. Disney, which has a 30 percent stake Hulu, saw losses of $580 million last fiscal year, according to an SEC filing.

This was, the SEC filing states, “primarily due to a higher loss from our investment in Hulu, partially offset by a favorable comparison to a loss from BAMTech in the prior year.”

BAMTech is the streaming technology that powers ESPN+ and other services. In total, streaming accounted for more than $1 billion in losses for Disney last fiscal year.

Meanwhile, Disney has yet to release its own streaming service, Disney+, which is slated for late 2019. Disney is also planning to increase its investment in Hulu, focusing more on original content and international expansion.

As part of Disney’s buyout of 21st Century Fox, Disney will soon own another 30 percent of Hulu. If the business goes similarly for Hulu this fiscal year, that will only increase Disney’s losses.