Disney can buy Fox if it sells 22 regional sports networks, Justice Dept. says

Mike Snider | USA TODAY

Show Caption Hide Caption AT&T, Time Warner merger may mess with your TV habits The AT&T and Time Warner merger could mean plenty -- or nothing -- to consumers, depending on a federal judge's decision.

The Walt Disney Co. is nearing the end zone with its $71 billion bid for a collection of Twenty-First Century Fox’s assets.

The Justice Department Wednesday approved the deal after Disney agreed to sell Fox's 22 regional sports networks.

Disney and Fox initially entered into a $52.4 billion deal in December 2017 for Fox's television and film studios, cable channels such as FX and National Geographic, and other assets including Fox's 30 percent share of streaming service Hulu and a 39 percent stake in U.K.-based pay-TV and broadband provider Sky.

But the DOJ said allowing Disney, which also owns ESPN and its family of sports networks, to also acquire Fox's 22 regional sports networks, "would likely result in higher prices for cable sports programming" licensed to pay-TV operators where those local markets serve. That in turn could lead to higher prices for consumers.

“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 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.”

Under the agreement with the DOJ, Disney has 90 days from closing date of acquiring the Fox assets to sell the networks. The networks are spread across the U.S. including YES (New York Yankees), Fox Sports West/Prime Ticket (UCLA, USC, Los Angeles Chargers, Los Angeles Clippers) and Fox Sports Ohio/SportsTime Ohio (Cleveland Cavaliers, Cincinnati Reds, Ohio State University).

Had Disney not agreed to the sale, the Justice Department was prepared to move forward on an antitrust suit to block the sale.



Now, Disney with the blessing of the DOJ and the Fox board, could see the deal close when both companies' shareholders vote on July 10, the filing says. Fox's board has suggested shareholders approve the Disney sale, according to a Securities and Exchange Commission filing dated Monday.

Disney said it was pleased with the DOJ's conclusion.

In the SEC filing, the Fox board foreshadowed Wednesday's announcement by the DOJ saying a deal with Disney would be "likely to receive required regulatory approvals and ultimately be consummated." However, the board voiced concern a transaction with Comcast carried "higher regulatory risk" and could be delayed or denied.

Concerns about regulatory approval were tempered when a federal judge two weeks ago ruled against the DOJ's antitrust suit to block AT&T's $85 billion acquisition of Time Warner.

Another bid may be coming from Comcast, which two weeks ago made its own $65 billion all-cash bid. The pay-TV provider, which also owns NBC Universal, is reportedly negotiating with other partner companies or private equity firms in case it needs more cash for another round of bidding, The Wall Street Journal reported Wednesday.

This bidding war was kicked off by 21st Century Fox executive chairman Rupert Murdoch and his sons James and Lachlan, who control the media company, and their plan to refocus Fox on live news and sports.

For Disney, this DOJ condition was not entirely unexpected. Disney had said it would agree to divest the networks if it was necessary to gain approval for the deal before the termination date, according to Monday's SEC filing.

More: A Fox-Comcast deal faces 'higher regulatory risk' than one with Disney, Fox says

Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.

