The Disney-Fox deal has been cleared by regulators after Disney agreed to sell the Fox Sports RSNs.
Disney’s $71.3 billion bid for most of 21st Century Fox won approval from the U.S. justice department on Wednesday after the company agreed to sell the 22 Fox-owned regional sports networks that are part of the deal. Disney will have 90 days to sell the RSNs once it is able to close the acquisition.
As both Disney and rival Comcast expected, the regional sports networks fell under government scrutiny. According to Variety, the justice department filed a complaint in federal court earlier Wednesday to block Disney’s acquisitions of the RSNs, arguing that adding the networks to Disney’s existing sports properties — i.e. ESPN — would be anti-competitive.
Disney agreed to divest the RSNs as part of a proposed settlement.
It is worth noting that the government’s rationale is questionable. Quoting the head of the justice department antitrust division:
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.
Disney acquiring the Fox RSNs would have had no impact on sports programming competition, as Disney does not currently compete in the RSN market. There are three primary RSN owners, Fox (22), Comcast (nine) and AT&T (three), and that would not have changed if one simply swapped Fox for Disney. In addition, it is hard to see how an ESPN with 22 RSNs would be dramatically more anti-competitive than present-day Fox Sports.
While the RSNs were thought to be a key to the deal when it was announced in December, it is likely the case that Disney did not think they were worth potentially jeopardizing the deal. Disney is not expected to sell back the RSNs to Fox, which Variety says has “little interest” in retaining them.
Comcast is still nominally in the running.
[News from Variety 6.27]
