DOJ Clears Disney to Acquire Fox Assets
The Walt Disney Co. said that the antitrust division of the U.S. Dept. of Justice has cleared the proposed acquisition by Disney of assets owned by 21st Century Fox.
The clearance would give Disney a big advantage over Comcast, which has also been bidding for the assets, which include Fox’s cable entertainment networks and its TV and movie studios.
To get the clearance, Disney has agreed to sell Fox’s regional sports networks. Disney has at least 90 days from the date the transaction closes to complete the sale.
Completion of the transaction is subject to a number of non-United States merger and other regulatory reviews, and other customary closing conditions, as well as approval of shareholders of both companies.
“American consumers have benefited from head-to-head competition between Disney and Fox’s cable sports programming that ultimately has prevented cable television subscription prices from rising even higher,” said Assistant Attorney General Makan Delrahim, who heads the antitrust division. “Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”
Justice had wanted AT&T to spin off programming assets to get its Time Warner deal through, signaling that without such spin-offs, it would likely mean higher programming costs and prices to consumers. But a court ruled against DOJ and the Time Warner deal proceeding without conditions or spin-offs. Justice saw the Disney-Fox deal as potentially having the same anticompetitive effect. "without the required divestitures, the proposed acquisition would likely result in higher prices for cable sports programming licensed to multichannel video programming distributors (“MVPDs”) in each of the local markets that the RSNs serve," Justice said.
Delrahim has signaled that spin-offs are preferable to behavioral conditions since the latter require monitoring and are in effect ways to make an illegal deal legal via hard-to-enforce conditions.
"The American Cable Association applauds the Department of Justice for conditioning Disney's acquisition of Fox assets on Disney's divestiture of Fox's 22 Regional Sports Networks (RSNs)," said ACA President Matthew Polka. "DOJ's action should convince Comcast to abandon its own pursuit of the Fox programming assets."