The Walt Disney Co. must sell 22 regional sports networks to avoid running afoul of antitrust laws in its proposed $71.3 billion purchase of 21st Century Fox assets, the Department of Justice said Wednesday.
The agency’s decision gives a major advantage to Disney in its bidding war against Comcast for Fox properties like the 20th Century Fox movie studio and the company’s 30 percent stake in streaming service Hulu. Experts predict a Fox-Comcast merger would likely face a more difficult federal antitrust review, with Comcast already controlling cable distribution service in addition to NBC Universal properties.
Without divestitures, the federal government believes Disney consumers could be forced to pay higher prices for cable sports programming in those 22 local markets.
“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,” Makan Delrahim, head of the Justice Department’s antitrust division, said in a statement. “Today’s settlement will ensure that sports-programming competition is preserved in the local markets where Disney and Fox compete.”
Fox initially agreed to a roughly $66 billion offer from Disney before Comcast made a $65 billion all-cash bid. The Murdoch-owned company later delayed a July 10 shareholder vote on the Disney merger, giving Comcast time to submit a new counteroffer. The cable giant is reportedly discussing a potential partnership with a private equity firm or another company for additional cash to help increase its bid. A Comcast spokeswoman didn’t respond to a request for comment.
Disney is eager to expand upon its successful “Avengers” franchise with Fox-owned Marvel assets like X-Men. The company is also seeking to launch its own streaming service with the Fox assets. Chief Executive Officer Bob Iger previously said Disney would pull its content off of competing services should the Fox deal close.
Disney’s stock rose 1.05 percent to $105.33 in New York trading on Wednesday. Fox climbed 1.5 percent to $48.40, while Comcast was down slightly at $32.72.
