US regulators conditionally approve Disney-Fox mega-deal
Disney wants $71.3 billion of Fox assets, but rival offer by Comcast expected
US antitrust regulators on Wednesday conditionally approved Walt Disney's proposed $71.3 billion (Dh261.89bn) purchase of key 21st Century Fox assets, boosting the chances for the tie-up to create a new media-entertainment powerhouse.
The US Department of Justice approved the deal subject to Disney selling 22 regional sports networks now owned by Fox.
The news moves Disney's proposed buyout one step closer to completion after the entertainment giant last week raised its bid in response to a challenge from cable and media conglomerate Comcast.
However, Disney-Fox is still not a done deal; Comcast was reportedly exploring partnering with another company on a higher bid.
Shares of Fox jumped 1.7 per cent to $48.50 in midday trading. Disney rose 0.7 per cent to $104.96, while Comcast slipped 0.3 per cent to $32.67.
Disney hailed the decision allowing the company "to resolve the limited potential concerns to position us to move forward with this exciting opportunity that will enable us to create even more compelling consumer experiences".
In reviewing Disney-Fox, the Department of Justice said that an asset sale was needed because Disney and Fox currently compete to sell cable sports programming in local markets around the United States.
The deal would have meant higher prices for these distributors, the agency said.
"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," said Makan Delrahim, assistant attorney general in antitrust.
"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 proposed settlement will be considered by a US federal court for final approval.
Disney and Comcast have been sparring over who will get assets that include production companies responsible for The Simpsons and Modern Family, film production businesses and a key stake in the online platform Hulu.
Disney first unveiled the purchase of the Fox assets in December, hailing the deal as a means to provide more valuable content amid the rise of mobile technology and other new viewing options that have dealt a blow to conventional cable.
After Comcast came in with a $65 billion all-cash bid on June 13, Disney raised its offer last week to $71.3 billion while adding a cash component to its stock offer.
Fox said last week the Disney proposal "offers a package of consideration, flexibility and deal certainty enhancements".
Comcast has been reaching out to potentially partner with other companies, such as a private equity firm or technology or media company, on a joint bid, according to reports on Wednesday in The Wall Street Journal and Bloomberg.
The deal would give Disney the vaunted 20th Century Fox studios along with a controlling stake in Hulu, the online platform created by media groups to challenge Netflix and Amazon.
Disney already owns the ABC broadcast television network, sports broadcasting group ESPN and major Hollywood film studios along with theme parks around the world.
The deal became possible when Rupert Murdoch, 87, and his sons decided to slim down their media-entertainment empire, leaving them with the Fox News Channel, the Fox broadcast network and some sports cable operations.
Included in the planned sale is Fox's 39 per cent stake in the British pay TV operator Sky. Murdoch has sought full control of Sky, but has faced opposition from regulators in Britain.
Updated: June 28, 2018 09:22 AM