The Department of Justice has okay’d the Disney’s bid for 21st Century Fox, bringing this acquisition one step closer to a reality! Buzz started building last fall/winter that the House of Mouse was interested in acquiring “most” of Fox’s assets. Despite similar overtures from Comcast to do the same, by mid-December Disney made a formal offer, which was given the thumbs up by the Fox board. That is where the Department of Justice stepped in, demanding an investigation to ensure that this blockbuster merger would not create a monopoly. In particular, the DoJ was concerned about cable services, specifically those related to sports.
And that is the one area in which the DoJ demanded a condition. Because Disney owns ESPN, they must sell off Fox’s regional sports networks, because with the two combined, that would form what the DoJ considers a monopoly when it comes to sports broadcasting. One plan that was already in place was that Fox had to consolidate Fox News and Fox Sports into a separate banner called New Fox that would not be included in the buyout.
The DOJ’s Antitrust Division’s Assistant Attorney General Makan Delrahim stated:
“American consumers have benefited 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. 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.”
At this point, it looks as though Disney will pay approximately $71.3 billion– $38 per share plus additional cash. However, the Fox board and shareholders could still entertain a counteroffer from Comcast, who previously bid $65 billion in all cash, roughly two weeks ago, causing Disney to up their offer to include cash. Comcast is reported to be looking to outside sources for additional cash to increase its bid, with some speculating that Fox could wind up selling for roughly $90 billion.
For its part, Disney had already stated that it was willing to divest itself of assets from Fox that accounted for $1 billion in revenue in order to make this merger work.
This story is still unfolding, but that’s where things stand now. Check back for additional updates!