Twenty-First Century Fox shares climbed 2.4%, to $48.80, on Wednesday following the announcement that the U.S. Department of Justice has given the green light to The Walt Disney Co.‘s intent to purchase the company’s assets that will not be spun off into “New Fox” — with one big condition.
Disney will be required to sell 22 Fox Regional Sports Networks.
This is a major concession, and the American Cable Association chimed in with its thoughts on the order.
To little surprise, the ACA, which represents independently owned small operators across the U.S., applauded the condition.
The deal does not include the nationally broadcast Fox News, Fox Business or Fox Sports networks.
“After the deal was announced, ACA raised concerns with the DOJ that the proposed combination would give Disney control of these critical programming networks that could be bundled with its other national and local programm,ing assets to harm consumers in many markets, particularly because Disney would control so much key national and regional sports programming rights,” the ACA said. “ACA suggested that Disney’s divestiture of Fox’s RSNs would mitigate the primary harm of the deal. ACA is pleased to see the DOJ agreed with our concerns. As the DOJ Complaint explains, the combination of Disney’s ESPN networks with Fox’s RSNs would likely substantially lessen competition resulting in higher prices paid by pay television providers and their customers.”
The ACA added that, in its view, “the DOJ’s action should convince Comcast to abandon its own pursuit of the Fox programming assets. 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.”
While Justice has chimed in, Disney has not gotten an affirmative signed, sealed, and delivered nod from Fox. This means Comcast has a chance to top Disney’s bid, but is fading as a possibility.