Disney and 21st Century Fox used 4 words that should make employees nervous

  • Disney has agreed a deal to buy much of 21st Century Fox’s studio and television production assets for $US52.4 billion.
  • The companies said in a press release that the acquisition would result in at least $US2 billion in “cost savings from efficiencies,” which could mean layoffs.

Disney has agreed a deal to acquire much of 21st Century Fox’s studio and television production assets for $US52.4 billion. 21st Century Fox shareholders will receive 0.2745 Disney shares for each 21st Century Fox share they own.

In the press release announcing the deal, the companies used four words that should make Disney and 21st Century Fox employees nervous: “cost savings from efficiencies.”

“The acquisition is expected to yield at least $US2 billion in cost savings from efficiencies realised through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction,” the release said.

In corporate speak, “cost savings from efficiencies” indicates areas where investment bankers or the firms involved in the deal have identified redundancies or opportunities to make the combined company leaner, thus saving on costs.

While so-called synergies can also mean cutting redundancies in things like software and machinery, a large chunk of the savings typically comes from reduced employee headcounts. At least one employee seems to be worried about their future at the company:

FoxTwitter/@maskedscheduler

As we’ve pointed out, these synergies often aren’t what they’re cracked up to be and don’t help earnings after mergers. Many of these cost-cutting measures may never come to fruition.

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