Members of Congress, led by Sen. Amy Klobuchar (D-MN), are calling for an anti-monopoly hearing regarding Disney’s buyout of 21st Century Fox‘s entertainment assets. Klobuchar, who is the ranking Democrat on the Senate subcommittee is backed by Rep. David Cicilline (D-RI) from the House Judiciary Committee and Rep. Frank Pallone Jr. (D-NJ), the ranking Democrat on the House Energy and Commerce committee.
Klobuchar said, “I’m concerned about the impact of this transaction on the American consumer.”
While we have already seen a bit of muscle flexing on Disney’s part, with its large demands from theaters that wanted to screen ‘The Last Jedi’, the film divisions don’t appear to be the real cause for concern. Instead, it looks as though the real issue centers around cable and satellite television and streaming services. In acquiring all of Fox’s cable channels, including sports, there is a question as to just how much power Disney will hold in this domain. If they have too much power, they can not only increase the cost of cable/satellite packages to consumers, they can force providers to include their channels, possibly at the expense of other “independent” channels.
As BTIG media analyst Richard Greenfield states:
“Ultimately, the real losers will be consumers who are forced to buy bigger channel bundles — including more and more unwanted networks — at higher prices. Why would the government allow the biggest programmer ‘bully’ to grow significantly stronger?”
Public Knowledge’s senior policy counsel, Phillip Berenbroick, raised the same argument:
“You have the potential to not only drive up the cost of the package. One of the concerns we’ve raised in other merger contexts, Time Warner-AT&T and others, is the diversity and availability of independent programming.”
The mitigating factor could be streaming services. Disney owns a controlling interest in Hulu, which trails behind Netflix and Amazon by a considerable margin. Disney can possibly leverage this acquisition as a defensive move to help it as it’s losing ground to these and other services.
This is still unfolding. And a hearing wouldn’t prevent the buyout, but the involved parties would need to present their cases. If Disney can prove that their buyout of Fox is not an effort to create a monopoly, but instead a defensive move to help it in a competitive market, all will be okay. If not, there could be some shuffling and reorganizing.
We’ll keep you updated as things become clearer.