The Department of Justice gave the Walt Disney Company bid for 21st Century Fox’s assets the green light. But, according to a report from Deadline, there's a catch.
The DOJ’s approval is subject to the condition that Disney must agree to omit Fox's regional sports networks from the deal. Assistant Attorney General Makan Delrahim of the department’s Antitrust Division explained that this is because of their concern about a possible ESPN monopoly in US cable sports programming:
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. 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.
Many people in the industry, including Wall Street investors and media observers, actually saw this coming. They had already cautioned those involved that the regional sports networks could become a sticking point in the $71.3 billion deal. Disney stated in a recent SEC filing that it would be willing to let the Fox regional sports networks go if regulatory approval depends on it.
We should note that DOJ approval isn't Disney’s ultimate goal, as several other regulatory bodies would still have to weigh in on the Fox deal. But Comcast Corporation, the other party in the bidding war, might be feeling the pressure to quickly submit a counter bid.
Deadline's sources suggested that the Philadelphia-based global telecommunications conglomerate has no intention of backing down. In fact, they’re currently working to line up outside funding sources, as the bidding could go as high as $90 billion.
