Disclosure: Affiliates controlled by Eric Jackson have long positions in Disney and Netflix.

Since David Faber first reported a few weeks ago on CNBC that Rupert Murdoch was looking to sell a substantial part of 21st Century Fox's assets to Disney, many media onlookers have wondered: why?

Enough has leaked out to provide 2 plausible explanations:

Selling at the top. Fox's shares are trading within 13% of their 5-year high. Before speculation about a deal started, they were 35% below their 5 year high. Murdoch is betting that it's better to cash in now near full value.

Rupert has always played to win. Murdoch has always looked to expand his empire. Now he's dramatically shrinking it because he doesn't think he has the pieces to win over the next 5 to 10 years. It's not big enough. With these assets as part of Disney, he thinks the combined entity will be large enough to compete against the Netflixes of the world.

In the last few days, there have been several reports that James Murdoch might join Disney after a transaction while Lachlan and Rupert will stay with the remaining Fox assets.

On Thursday, the Murdoch-owned Wall Street Journal reported that Iger would extend his employment agreement and remain at Disney as CEO for longer than his currently planned last year in 2019 if Disney wins the Fox assets. It appears that Rupert wants this as part of a deal.

Andrew Ross Sorkin of DealBook has speculated two reasons why. He believes Murdoch is worried that Iger's 2019 successor might not be as invested in the Fox assets as Iger is, and that Murdoch wants to keep Iger away from a 2020 presidential challenge to Trump.

I disagree with these ideas. Here's what I think is going on:

Rupert thinks his Disney stock will be worth more in 5 years if Iger stays on as CEO than if he leaves. It remains to be seen just what the structure of a Fox-Disney deal will look like, but Rupert will likely be the single biggest holder of Disney stock after it's done. What's more, he might have to hold that stock for years to keep his tax bill as low as possible on this transaction. So, he's going to be joined at the hip to Disney for the long-term. Iger has done a great job at Disney. It's also no secret that there's no heir apparent internally waiting in the wings to take over. So why not have him to stay on? And for Iger, it's a great gig with excitement around these new assets.

There's also a James Murdoch angle here. What father wouldn't want to see his son go on to lead a bigger business than what he built? But if James were announced as Disney's next CEO today, there might be some questions about whether he's ready -- especially since he has no direct experience running the Disney business. But what if Iger stays on and James gets to earn his stripes integrating the Fox assets and running other parts of Disney in the meantime? By 2022, James would be an old hand around Burbank. And, if he did take over, that would make Rupert smile (even if it's not promised today).

We should find out more details late next week when a deal is likely announced between Fox and Disney.

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