WASHINGTON--The Department of Justice on Wednesday cleared the way for Disney to acquire the assets of 21 Century Fox pending the sale of Fox’s regional sports networks.
The announcement by the DOJ’s antitrust division gives Disney a leg up over Comcast, which is also attempting to purchase the assets, which include the Twentieth Century Fox studio. The two companies have made several proposals that has driven the value of the transaction from $52.4 billion to $71.3 billion as of last week. Comcast is attempting to partner with other companies or private equity investors to raise additional cash for the deal, which could reach up to $90 billion, according to a report in the Wall Street Journal today.
To meet the DOJ’s final approval, Disney will have to divest 22 regional sports networks, responding to critics’ fears that a combined Disney-Fox company would result in higher prices for cable sports programming. The department has given Disney 90 days to divest the RSNs following closure of the deal.
“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. “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.”
Matthew Polka, president and CEO of the American Cable Association applauded the decision and urged Comcast to drop its bid.
"DOJ's action should convince Comcast to abandon its own pursuit of the Fox programming assets,” Polka said. "It already has too much market power by virtue of being both the nation's largest cable operator and a significant owner of national, regional and local programming. And its ability to harm rivals has only increased with the recent expiration of FCC conditions that were put in place in 2011 to address this concern. Comcast's acquisition of even more programming is a bridge too far for competition and consumers."
The deal is also subject to other regulatory approvals outside of the U.S. as well as shareholder approval.