Justice Department Approves Disney’s Merger With Fox as Comcast Mulls Next Move

Disney will divest Fox’s 22 regional sports networks

One week ago, Disney upped its Fox bid to $71.3 billion in a cash-and-stock deal, well ahead of Comcast’s $65 billion offer. Getty Images, 21st Century Fox, The Walt Disney Company
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The Walt Disney Company just received its biggest boost yet in its quest to beat out Comcast for the right to purchase 21st Century Fox: the Justice Department has conditionally approved Disney’s deal for Fox.

As part of the DOJ’s approval, Disney has agreed to divest Fox’s 22 regional sports networks, which were initially going to be part of the merger.

“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,” said Makan Delrahim, chief of the Justice Department’s antitrust division, in a statement.

The DOJ’s thumbs-up gives Disney a huge advantage over Comcast. But several hurdles remain: a judge will still have to approve the settlement, Fox’s shareholders need to vote on the deal, it still needs regulatory approval outside the U.S. and Comcast could still decide to increase its own offer.

UPDATE: In a memo to Fox employees, CEO James Murdoch and executive chairman Lachlan Murdoch called the decision “a big step forwarded, adding “we anticipate that the Disney transaction and the creation of new ‘Fox’ will be completed within 6-12 months.”

One week ago, Disney upped its Fox bid to $71.3 billion in a cash-and-stock deal well ahead of Comcast’s $65 billion offer a week earlier and its initial $52.4 billion deal last December.

Comcast has been mulling its next move since Disney countered last week. The company is considering looking for private equity investors or strategic partners if the bidding for Fox approaches $90 billion, according to The Wall Street Journal. But the company is considering all options, including bowing out of the bidding.

Disney and Fox had indefinitely postponed a shareholder meeting that had been set for July 10 to discuss the merger.

Comcast had been in talks with Fox last fall, but Fox opted to go with Disney’s bid, in part because of regulatory concerns. The Fox board still has worries about the government derailing a Comcast deal; Comcast, emboldened by AT&T’s seismic court victory two weeks ago, insisted that its bid had an equal or greater chance of gaining approval than Fox’s.

Whichever company prevails will receive assets like Fox’s movie and TV studios, TV networks like FX and National Geographic, Fox’s 30 percent ownership in Hulu and Fox’s stake in European broadcaster Sky. The deal won’t include certain assets like Fox Broadcasting, Fox Sports, Fox News and Fox Business Network, all of which will be spun off into a new company tentatively called New Fox.


@jasonlynch jason.lynch@adweek.com Jason Lynch is TV Editor at Adweek, overseeing trends, technology, personalities and programming across broadcast, cable and streaming video.
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