It had seemed like an open-and-shut case in the beginning, when Disney announced last September that it intended to acquire several media assets from 21st Century Fox, including the 20th Century Fox film studio which has held the movie rights to the X-Men, one of the most lucrative franchises of Marvel which is now a Disney subsidiary. About the only obstacle then was trying to make the deal pass antitrust investigation, however Comcast complicated things earlier in June by making a larger all-cash bid. Disney raised its mixed cash-stock bid days later, and now their acquisition bid seems almost assured.
CNBC tells us that the US Justice Department has given the go-ahead for Disney to finalize its negotiations with Fox to acquire a number of its assets for the total of$71.3 billion worth in cash and Disney stock. With this ruling indicating that the antitrust courts see nothing foul with the deal, the House of Mouse can feel vindicated that its trust in Fox preferring to sit at table with them – having been in discussion for so long – compared to the recent offer by Comcast. The other media giant had tried to trump Disney’s initial offer with $65 billion cash.
There is however, a condition set forth by the Justice Department in order to make sure that the Disney-Fox deal fully meets all antitrust regulations. This is for the House of Mouse to sell off a few items from the 21st Century Fox portfolio, these assets being 22 regional sports networks under the Fox umbrella. Disney has agreed to divest these networks which together generated upwards of $1 billion in earnings before interest, tax, depreciation and amortization (EBITDA). Assets with such earnings when acquired by another company, is a warning indicator to antitrust regulators, making Disney’s decision a prudent move.
Many of the exact details in which the Fox regional sports networks are going to be divested to meet regulation reviews were laid down in a Disney-Fox filing at the Securities and Exchange Commission on Wednesday, June 27. This action has strengthened the position of the House of Mouse in getting the media assets it is aiming for from 21st Century Fox, the latter of which has raised concerns regarding Comcast possibly being the more scrutinized for antitrust violations compared to Disney despite their all-cash offer. With this, Comcast feels itself bedeviled by its failed bid for Time Warner back in 2015, which was quashed because of the same points being brought up now in light of its Fox offer.
The variety of media franchises that will come under the large Disney umbrella should the Fox deal be completed is remarkable: James Cameron’s “Avatar”, “The Simpsons” and “X-Men” among others.
Image courtesy of Comic Book Resources