Published: Thu, June 28, 2018
Culture | By Wayne Carr

Disney gets approval to buy Fox assets, but there’s one big catch

Disney gets approval to buy Fox assets, but there’s one big catch

The Justice Department approved Disney's $71.3 billion acquisition of 21st Century Fox with the condition that Disney agrees to sell off Fox's 22 regional sports networks.

The Justice Department said that without the divestitures, "the proposed acquisition would eliminate the substantial head-to-head competition that now exists between Disney and Fox and would likely result in higher prices for cable sports programming". Together with ESPN, which it already owns, Disney would have had too tight a grip on the sports market, the Justice Department maintained.

In reviewing Disney-Fox, the Justice Department said an asset sale was needed because Disney and Fox now compete to sell cable sports programming in local markets around the United States. Nevertheless, Disney being a smaller media conglomerate than Comcast-outside of the movie business-made them a friendlier alternative for Fox, hence why Murdoch originally approached Disney first a year ago.

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The $71 billion sale would include 21st Century Fox's film and television studios, cable entertainment networks and global properties. Sources say that the telecommunications company is exploring other avenues and looking at private-equity investors and tie-ups with other companies as the bidding for 21st Century stands to reach up to $90 billion. FOX News isn't covered by the deal, however.

Last week, Fox agreed to Disney's revised bid of $71.3 billion in cash and stock, which came after Comcast overrode Disney's original $52 billion all-stock deal by offering $65 billion in cash. The sale also includes Fox's 30-percent stake in Hulu.

Currently, Fox's regional sports networks have more than 60 million subscribers and local rights to a majority of baseball and basketball teams.

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But Disney and Fox have postponed a meeting that was set to take place on July 10, so Comcast seemingly has some time to take a breath and make a decision about how they're going to approach this.

Fox, which is controlled by Rupert Murdoch and his two sons, who are seeking to create a "new" Fox that is focused on its broadcast network, cable news and sports operations.

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