12:30pm PT by Eriq Gardner
Justice Dept. Says Court Shouldn't Decide Who Buys Fox's Sports Networks From Disney
If the United States Department of Justice had decided to take a much harder stand on The Walt Disney Company's partial merger with 21st Century Fox, there probably would have been a much bigger legal fuss, but upon the June 2018 decision that the government would only force Disney to sell off Fox's regional sports networks, the DoJ got just one public comment. On Friday, the government told a judge that it shouldn't listen to the American Cable Association.
Rupert Murdoch's decision to sell off Fox's studio assets to Disney for more than $71 billion created a colossus in the entertainment and media industry. The marketplace concentration didn't disturb the government except for one caveat: The owner of ESPN couldn't acquire Fox's 22 RSNs. That would lessen competition in the licensing of cable sports programming, the DoJ's Antitrust Division concluded.
After publishing the final proposed judgment in the Federal Register and inviting comment, only the ACA came forward to register a complaint.
The divesture, left unchecked, would "create a new and equally significant antitrust problem," stated the ACA in a letter.
The association of independent cable operators warned that if another big broadcaster like CBS or Comcast/NBCUniversal was allowed to buy Fox's RSNs from Disney, that might lead to the withholding of must-have programming, thus leading to increased license fees, and present the same sort of "vertical integration" problem that the DoJ identified in attempting to block the merger between AT&T and Time Warner.
The Justice Department responds that the federal court should only be concerned with reviewing the remedy — the forced divestiture — and not the next step.
"The Court should reject the ACA’s invitation to substitute its judgment for the United States’ judgment of the acceptability of divestiture buyers and the overall effect of the divestitures on competition," writes a DoJ lawyer in a brief to the judge reviewing the Disney-Fox merger suit. "Approving divestiture buyers is the type of action that is properly within the United States’ discretion."