DOJ Approves Disney’s $71B Bid for Fox on the Condition That It Divest All 22 Fox RSNs
The Department of Justice approved the Walt Disney Company’s $71 billion bid for the entertainment assets of 21st Century Fox on Wednesday on the condition that Disney divest all of Fox’s 22 regional sports networks, which it has agreed to do. The government’s approval likely throws a wrench in Comcast’s competing bid for Fox’s assets and puts Disney, which owns ESPN, in pole position.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the Southern District of New York to block the proposed acquisition. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. The Department said that 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.
“American consumers have benefitted 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 of the Justice Department’s Antitrust Division in a statement. “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.”
According to the Department’s complaint, Disney and Fox compete to sell cable sports programming to MVPDs in various local markets across the United States. Because of this competition, the complaint alleges that the proposed acquisition would likely result in MVPDs paying higher prices for cable sports programming in those local markets. The proposed settlement requires Disney to divest 22 RSNs, currently owned by Fox, to a buyer acceptable to the Department. The Department has determined that the divestitures would resolve antitrust concerns arising from Disney’s acquisition of certain assets from Fox.
According to Reuters, Fox’s RSNs have about 61 million subscribers and have rights to broadcast live games of 44 of 91 U.S. professional sports teams in three of the four major sports leagues.
UPDATE 6/27/18 6 p.m. ET: The Wall Street Journal previously reported that, while the DOJ’s approval of Disney’s bid deals a significant blow, Comcast is not out of the running just yet. Comcast is now exploring tie-ups with other companies or private-equity investors that could provide additional cash as the company continues to pursue Fox’s assets.