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Monday, 23 July, 2001, 14:07 GMT 15:07 UK
Disney buys Murdoch cable network
The Magic Kingdom, Walt Disney World
Disney has been slow to make big acquisitions
The Walt Disney Company said it had acquired cable network Fox Family Worldwide from Rupert Murdoch's News Corporation and Saban Entertainment.

Disney paid $3bn (2.1bn) in cash for the network, and agreed to assume $2.3bn of its debt.

The agreement will add a network with 81 million subscribers in the US, 24 million in Europe and 10 million in Latin America to Disney's cable operations, which the firm has long been keen to expand.

Acquisition of the Fox Family channel will also strengthen Disney's influence with younger audiences, as well as expanding the Disney brand name overseas.

Disney, the world's second-largest media and entertainment conglomerate after AOL Time Warner, aims to boost the proportion of its international revenue to more than 30% in the next five years, from the current 18%.

The deal comes after a weekend of fierce speculation in the American press on Fox Family's fate, with rumours of bids from rival media firms AOL Time Warner and Viacom.

The deal is expected to close within three or four months.

Pressure

Disney urgently needs this deal to work.

The firm has suffered from the slump in advertising revenue, and its shares have fallen more sharply than its industry peers this year.

Since 1997, the company's revenue has grown only 13%, and profits have declined to $920m from $2bn in 1997.

Disney's critics say the firm has not moved aggressively enough to compete against rivals like Vivendi Universal and AOL Time Warner.

Disney acquired Capital Cities/ABC, one of America's three nationwide TV networks, in 1996, arguing that it would gain distribution muscle for existing programming.

But analysts say the benefits have been slow to come through, and that the Fox Family deal must be structured carefully in order to benefit the whole group.

See also:

08 Jun 01 | Business
Disney in global push
08 Jun 01 | Americas
Clean underwear for Disney workers
28 Mar 01 | Business
Disney to axe 4,000 jobs
19 Jan 01 | Entertainment
Disney settles Fantasia claim
05 Jan 01 | Entertainment
Disney and Sony lead worldwide takings
31 Oct 00 | Entertainment
Silent star heir sues Disney
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