The Walt Disney Company got the Justice Department’s official approval on Wednesday to acquire 21st Century Fox for $71.3 billion, but the company must sell off Fox’s 22 regional sports networks.
The completion of the transaction still has to undergo non-United States merger and other regulatory reviews, and other customary closing conditions along with winning approval of shareholders of both companies. Plus, Comcast could still come back with a higher bid for Fox. But for now, Disney appears to have a big leg up in the bidding war for Fox’s studio and cable network assets.
“We are pleased that the DOJ concluded that, with the exception of the proposed acquisition of the Fox Sports Regional Networks, the transaction will not harm competition, and that we were able to resolve the limited potential concerns to position us to move forward with this exciting opportunity that will enable us to create even more compelling consumer experiences,” Disney wrote in a statement.
The DOJ also seemed pleased with the agreed-upon divestiture of the RSNs.
“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 obtained by Adweek.
The DOJ’s OK comes exactly one week after Disney raised its bid for Fox to fight off a rival offer from Comcast.
Disney originally bid $52.4 billion in an all-stock deal, but now the company is offering $38 per share in either cash or shares of Disney common stock to Fox shareholders. The deal puts a collar on the stock offer that ensures Fox shareholders will get $38 per share if average Disney stock price at closing is between $93.53 and $114.32. Disney expects to pay about $35.7 billion in cash and issue approximately 343 million new shares to 21st Century Fox shareholders.
For its increased bid, Disney will still be acquiring 21st Century Fox’s film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000 Pictures; Fox‘s television creative units, Twentieth Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; Star India; and Fox’s interests in Hulu, Sky plc and Tata Sky.