Cade clears Disney/Fox merger with restrictions

In the judgement session that took place this Wednesday, the Administrative Council for Economic Defense (CADE, in its acronym in Portuguese) approved, with restrictions, the acquisition of Twenty-First Century Fox by The Walt Disney Company. The operation received the greenlight with the condition of the Fox Sports channel sale, among other measures negotiated in a Merger Control Agreement (ACC in its acronym in Portuguese).

The Tribunal decided for the application of structural remedies, since it understood that the merger generates competition concerns in the market of cable sports channels - which include ESPN (Disney) and Fox Sports (Fox). Currently, there is only one rival of great audience capable of competing with those channels.

In the Council evaluation, the operation would leave the market of cable sports channels even more concentrated, with increased probability of Disney exercising its market power. Furthermore, there would be a potential decrease in the quality and diversity of available sports content, as well as an increase in costs that could be passed along to consumers.

The sale of Fox Sports aims to allow that the market structure remains with the same competitive pressure that precedes the merger, with the continuity of three options of sports channels for Brazilian consumers: SporTV (which belongs to GloboSat), ESPN and another company with Fox Sports assets.

The assets package that shall be disinvested includes all transmission rights of sports events that belong to Fox Sports and all contracts with cable TV operators; as well key-staff, real estate and transmission equipment. The deadline for the conclusion of the sale by Disney is confidential.

Through the ACC signed, Disney also commits not to hire, for a definite amount of time, the sports leagues currently transmitted by Fox Sports, and not to reacquire the assets to be sold. Disney also commits to offer the future buyer the option of freely licensing the Fox brand.

International cooperation

The Disney/Fox operation was notified in 25 jurisdictions and culminated in the collaboration among antitrust authorities from all over the world. In Latin America, there was international cooperation with agencies from Mexico and Chile.