The Department of Justice on Wednesday gave its official OK for Disney to proceed with its $71.3 billion acquisition of entertainment assets from 21st Century Fox, creating an obstacle for a potential rival offer from Comcast.
As a condition of approval, the DOJ said it will require Disney to sell off Fox’s 22 regional sports networks – a move Disney already indicated it was ready to make in order to clear any antitrust concerns.
Without the divestitures, the agency said the proposed deal would likely result in higher prices for cable sports programming licensed to MVPDs in local markets.
The settlement put forth by the DOJ still requires court approval. According to the consent decree, Disney would have 90 days after deal close to complete selling off the RSNs, with the potential for a 90-day extension.
“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, 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.”
The decision could prove to be a blow to Comcast, which is also in pursuit of the Fox assets. Disney last week upped its bid to $38 per share, topping Comcast’s $35 per share all-cash offer. Comcast has yet to counter in the escalating bidding war, but is reportedly considering enlisting a private equity partner for help to sweeten a potential rival bid, according to Bloomberg.
The Disney-Fox deal will still have to garner foreign regulatory approval, as well as the greenlight from both companies’ shareholders. Fox previously canceled a July 10 meeting where stockholders would have voted on the Disney agreement. A new meeting has not been set yet.