Walt Disney Co won USA approval to buy Twenty-First Century Fox Inc entertainment assets for $71.3 billion on condition it sell Fox's 22 regional sports networks, the Justice Department said on Wednesday, giving Disney an edge over Comcast Corp's competing bid.
That concession was long expected, as Disney owns ESPN, but the Justice Department filed a complaint this morning to block the entertainment conglomerate from acquiring those properties.
The government said an asset sale was needed because Disney and Fox now compete to sell cable sports programming to video distributors in local markets around the United States.
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That's bad news for Comcast, which has been trying to outbid Disney for the Fox properties.
The conditions placed by the Justice Department allow Disney to still absorb the parts of Fox that have become key to its long-term strategy, namely the company's movie and television studio, .
By forcing Disney to divest the Fox sports networks, the DOJ said in a statement that it is ensuring "that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution". In one scenario, a strategic investor could take on Fox's United States assets - including the 20th Century Fox studio and regional sports networks - and leave Comcast with overseas assets.
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Fox originally planned to vote on a deal at a July 10 shareholder meeting, but postponed it after Disney's last offer, giving Comcast more time for another bid.
Stay tuned to Heroic Hollywood for the latest developments on Disney and Comcast's bids for 21st Century Fox's assets! A week ago, Disney returned with an amended agreement with Fox for $71.3 billion, split evenly between cash and stock.
Disney is looking to boost its content as it readies to launch its own streaming service in 2019 to take on Netflix. The approval comes in the wake of the AT&T-Time Warner decision that opened the floodgates for large-scale mergers between industry-adjacent companies.
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The deal does not include Fox News, the Fox broadcast network, television stations, Fox Sports 1 and Fox Sports 2.