Regulatory approval for Disney-Fox acquisition
Walt Disney (DIS) is waiting to close the acquisition of most of the media and entertainment assets of 21st Century Fox (FOXA) for $71.3 billion. However, to seal the deal, Disney has to obtain regulatory approval from Mexico and Brazil (EWZ). Also, the media giant needs to sell Fox’s 22 regional sports networks (or RSNs), which was the condition to get US regulatory approval in June 2018. Notably, Disney already has a sports network called ESPN. Therefore, the regulators want Disney to sell RSNs within 90 days of the closing of the Disney-Fox deal. Disney is working to close its merger within the first half of the year but hinted that it could close by as early as March.
Condition in Brazil
However, Disney didn’t get regulatory approval for its merger with Fox in Brazil. According to Bloomberg’s report on February 12, Brazilian regulators have asked Disney to sell one of its two sports channels, Fox Sports or ESPN, to get regulatory approval. According to Brazil’s Administrative Council for Economic Defense, known as CADE, the Disney-Fox deal could dent competition in the country. CADE is likely to decide the fate of the deal on March 17 if the case isn’t discussed at the upcoming meeting on February 27.
Fox’s vital assets
Fox assets would give premium movie content from National Geographic, FX, and Searchlight, and other assets to Disney, and could help it compete against digital rivals like Netflix (NFLX) and Amazon (AMZN). The acquisition will not only give Disney a dominant stake in video streaming company Hulu but could also provide the media giant access to Indian media conglomerate Star India.
User penetration is increasingly growing for the “video-on-demand” segment, as is evident from the chart above, and is expected to increase to 9.9% in 2022 from 7.5% in 2018.