The U.S. Department of Justice approved The Walt Disney Co.’s proposed $71.3 billion purchase of certain 21st Century Fox assets, a move that could complicate Comcast’s plans to snap up the properties itself.
Disney has said its path to regulatory approval was expected to be smooth – and it has been in contact with the DOJ since December, when its initial bid for the Fox assets was first made. As part of the DOJ approval of the deal, Disney has agreed to divest of Fox’s 22 regional sports networks.
But Disney would keep the other properties – cable networks FX, FXX and National Geographic; TV and film production studio 20th Century Fox; and Fox’s 39% interest in British satellite TV company Sky and its 30% stake in online video pioneer Hulu.
"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,” DOJ antitrust division head Makan Delrahim said 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."
Disney has about 90 days from the closing date to divest of the assets.
The approval does not mean that Comcast – which sparked the bidding war for the Fox assets on June 13 with its $65 billion bid (countered about a week later by Disney’s sweetened $71.3 billion offer) – is out of the Fox hunt. But it does toss another wrinkle in the ongoing battle for the assets.
Comcast has said it believes that its path to regulatory approval is clear, especially in the wake of the DOJ’s defeat in blocking AT&T’s $108.7 billion merger with Time Warner Inc.
Fox, according to SEC filings earlier this week, has favored a Disney offer because it had believed a Comcast bid would face a mountain of regulatory pushback. Now, with DOJ approval in hand, the Disney bid just got more attractive.
According to the Wall Street Journal, Comcast has been talking with private equity firms about raising more cash for a larger bid, but the company believed it had time to beef up its war chest because a July 10 shareholder meeting to vote on the Disney offer had been postponed. Comcast officials were not available for comment.
"The American Cable Association applauds the Department of Justice for conditioning Disney's acquisition of Fox assets on Disney's divestiture of Fox's 22 Regional Sports Networks (RSNs)," said ACA President Matthew Polka. "DOJ's action should convince Comcast to abandon its own pursuit of the Fox programming assets."