Call 2017 the year 21st Century Fox (NASDAQ:FOX) (NASDAQ:FOXA) gave up. The company, led by Rupert Murdoch, sold off its movie and television production assets to Walt Disney (NYSE:DIS) in a deal that was good for shareholders, that basically admitted the company could not compete in the evolving entertainment market.

What happened

In a deal that still requires regulatory approval, Fox agreed to sell Disney its entertainment division. This includes its movie studio and television assets including FX and FXX.

Fox will keep its broadcast network as well as FOX News, Fox Business and the FS1 and FS2 sports channels. Disney will get the rights to a number of major movie franchises as well as Fox's animated lineup including The Simpsons.

"We have always made a commitment to deliver more choices for customers; provide great storytelling, objective news, challenging opinion and compelling sports," said CEO Rupert Murdoch in a press release. Through today's announcements, we are proud to recommit to that promise and enable our shareholders to benefit for years to come through ownership of two of the world's most iconic, relevant, and dynamic media companies."

So what

This deal is basically Fox admitting that it can't compete as a movie studio. That may have been a tough admission for Murdoch to make, but this deal maximized shareholder value. Shares in the company closed 2016 at $27.25 climbing to $34.12 to end 2017, a 25% gain, according to data provided by S&P Global Market Intelligence.

Now what

The only question that remains is whether federal regulators will approve the deal. The sale gives Disney an impressive array of intellectual property including Avatar, which it already had a theme park deal for, and X-Men, which it owned, but had licensed to Fox.

It's very possible that conditions are imposed upon this deal since it would give Disney, which is already planning two streaming services, a controlling interest in Hulu. It's possible that the company would have to sell something or make concessions in order to close this sale.

On the Fox side, the assets that remain are still a viable company. Fox News remains a powerhouse though the broadcast network will be hurt by the loss of its production studio and FS1 and FS2 will lose growth opportunities since Disney will be taking over the company's regional sports networks.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.