Fox Family sold to Disney in £3.7bn deal

The Walt Disney Company confirmed yesterday that it was buying the Fox Family Worldwide group of cable television holdings from Rupert Murdoch's News Corp, in a deal intended to dig both companies out of trouble as they seek to expand their media holdings and prop up their unstable stock prices.

Disney said it was paying $3bn (£2bn) in cash and assuming a further $2.3bn in debt from News Corp and its main Fox Family partner, Saban Entertainment. Disney's chief executive Michael Eisner hailed the deal as strengthening his company's worldwide assets.

The purchase, which includes such properties as the Power Rangers series, is Disney's first major acquisition since taking over the ABC television network in 1995. It comes at a time when the company is under attack for failing to grow with the speed and technological innovation of rivals like Viacom, AOL Time Warner and Vivendi Universal.

The deal also helps Mr Murdoch out of a hole as he struggles to find the cash to launch a takeover bid for DirecTV, the satellite service owned by General Motors.

Haim Saban, the head of Saban Entertainment, had exercised an option to sell his 49.5 per cent stake in Fox Family back to News Corp; in addition to the cash from Disney, Mr Murdoch will now be spared having to pay off Mr Saban.

Share trading in the two companies yesterday suggested the deal was considered a so-so move for Disney, whose shares fell 12 cents on the day, but a coup for News Corp, whose shares gained 67 cents. Analysts wondered whether the price Disney paid was too high.