Walt Disney-Fox Family Deal Is Expected Today

Walt Disney Co. is expected to announce this morning that it has reached a deal with the owners of Fox Family Worldwide to purchase the company for about $3.2 billion plus the assumption of $2.1 billion in debt, sources said Sunday.

Analysts had been expecting a sale of the troubled Fox Family, a joint venture of News Corp. and children’s television entrepreneur Haim Saban, that would value the company at $3 billion to $4 billion. A sale would provide News Corp. Chairman Rupert Murdoch with a cash infusion as he seeks to finance a merger of his satellite assets with Hughes Electronics Corp., owner of DirecTV.

The Times reported Saturday that the two parties were negotiating a deal.

For Disney, a purchase would increase its cable holdings and broaden the audience reached by its offerings. In the U.S., Disney would gain Fox Family--a channel aimed at an older audience than either the Disney Channel or Toon Disney draws.

Sources said the cable network, which reaches 80 million households in the U.S., would probably be renamed ABC Family and receive additional programming from other Disney television outlets, such as the ABC broadcast network and cable channel ESPN. ESPN, in turn, would promote baseball games that appear on Fox Family as part of News Corp.’s six-year contract with major league baseball, sources said.

Disney also would eliminate redundant functions in the company, including in areas such as advertising sales and cable-affiliate relations. It was unclear how many employees might be affected.

Fox Family saw a decline in viewership after News Corp. and Saban purchased it in 1997 as part of the $1.9-billion acquisition of International Family Entertainment from TV evangelist Pat Robertson and his family. The channel took a ratings plunge and has only reversed the trend in the last three quarters.

If Disney reaches a deal with the Fox Family owners, the Burbank-based entertainment company also would get Fox Family’s channels in 50 European and Latin American countries and the publicly traded Fox Kids Europe.

The children’s channel is of particular interest to Disney because its own Disney Channel is a premium service that costs television viewers extra in some places and reaches a far smaller audience than the Fox outlet. Overall, Fox Kids Europe reaches 34 million households, compared with Disney Channel International’s 15 million.

Sources said the channel will maintain the Fox Kids title for the time being but will eventually be renamed with a Disney brand.

Sources say Disney could convert the international channels to Toon Disney, a 3-year-old cartoon channel that reaches more than 15 million subscribers in the U.S., but which has little international distribution.