LOS ANGELES • Walt Disney has completed its US$71 billion (S$96 billion) acquisition of 21st Century Fox Inc's entertainment assets, and must now get to the task of squeezing out promised cost savings, an effort that will lead to thousands of layoffs in the film and TV business.

With the deal, Disney takes over a portfolio that includes the 104-year-old 20th Century Fox studio, the FX and National Geographic cable networks and an additional 30 per cent stake in online video service Hulu.

To make the deal work financially and support the company's costly efforts to compete with Netflix, chief executive Bob Iger has promised US$2 billion in cost savings, a commitment that all but assures epic job cuts.

The deal is one of the most dramatic in the current wave of entertainment industry mergers, shrinking the number of major Hollywood studios to five from six and putting the irreverent Homer Simpson and Family Guy in the same stable of cartoon characters as Mickey Mouse and Donald Duck.

The closing follows a nearly two-year effort that included a bidding war and regulatory compromises from Brussels to Brasilia.

Underscoring the looming human cost, Disney is taking on 15,400 Fox employees, while the new and smaller Fox Corp will keep about 7,000.

In August last year, Disney executives said they would achieve their targeted savings over two years, with the United States operations bearing the brunt early on. The Hollywood Reporter said last month that 4,000 jobs will be lost.

"You can anticipate more domestic at the front end, just because of regulatory issues outside of the US," chief financial officer Christine McCarthy said in August last year. In other words, it will be easier to cut worker numbers at home first.

Already the largest entertainment company in the world, Disney emerges with more clout to negotiate everything from the fees it charges cable TV operators to the share of ticket revenue at movie theatres. The sale represents the end of an era for Mr Rupert Murdoch, the 88-year-old media mogul who steered the Fox studio for nearly four decades.

Under the terms of the deal, Fox shareholders will receive US$38 a share in cash or Disney stock. They also get stock in the new Fox, led by Mr Murdoch's older son Lachlan.

That company will continue to operate Fox News, the Fox broadcast network and Fox Sports 1. It will focus on news and sports - live programming that is seen as less vulnerable to viewer losses in a streaming age - and also plans to ramp up production of scripted shows designed to appeal to a broad demographic.

At its heart, the merger is a huge bet that Mr Iger can establish a direct connection with consumers, sell them multiple monthly subscriptions to watch Disney programmes and upend the traditional model in which network owners collect fees for their content from pay-TV operators.

In April last year, Disney launched ESPN+, a US$5-a-month sports streaming service that has already passed two million subscribers. Hulu, in which Disney will acquire majority control, will focus on more adult-oriented fare, such as that produced by Fox's FX network and its Oscar-winning Fox Searchlight film studio.

Later this year, it will introduce Disney+, a family-focused streaming service that Mr Iger has said will be the home of all the classic Disney films, as well as original content.

NEW ASSETS

Much as Mr Iger built Disney's film studio into the industry leader by acquiring Pixar's animation, Marvel Entertainment's superheroes and Lucasfilm's Star Wars series, the Fox acquisition will bring new characters and franchises.

Mr Iger said at the March 7 annual meeting, for example, that a sequel to Fox's Avatar, the top-grossing movie in history, will be delivered in late 2020.

He plans to continue operating 20th Century Fox, Fox Searchlight and other film labels, many of which release the kind of R-rated films that Disney previously stayed away from.

Disney's new assets also include the powerhouse Fox TV studio, responsible for hits such as Homeland on Showtime, This Is Us on NBC and Empire on the Fox network.

Personnel decisions over the past few months reflect a virtual Fox takeover of Disney's TV business, with Fox president Peter Rice overseeing the combined company's entertainment channels and TV studio chief Dana Walden leading production. FX chief executive John Landgraf continues in his role.

Mr Iger's gamble is far from a sure thing. In addition to the cost of starting, marketing and running new streaming services, Disney is giving up revenue it could have made by selling its movies and TV shows to rivals. A deal with Netflix expired last year, for example, and Disney has said that revenue lost from licensing content will cut operating income by US$150 million this year.

The Fox deal, which was officially announced in December 2017, led to a bidding war with Comcast Corp. Disney warded off its rival suitor, but had to pay about 36 per cent more for Fox under new terms announced June last year. Comcast won Fox's stake in the Sky Plc and ultimately took over satellite TV service in Europe.

To win the blessing of regulators, Disney agreed to sell 22 Fox regional sports networks in the US, its half of the A&E channels in Europe and Fox's sports network in Brazil.

BLOOMBERG