Disney Clears Another Hurdle in Acquisition of Fox

Early this week, European antitrust regulators announced their approval of Walt Disney Co’s $71.3 billion acquisition offer for 21stCentury Fox’s entertainment arm.  There is a condition, however, that the House of Mouse must sell its existing stake(s) in certain European television channels.

More specifically, Disney must agree to divest its current holdings in Blaze, Crime & Investigation, History, H2, and Lifetime in what is known as the European Economic Area (EEA). These channels are owned by A&E Television Networks (which is actually a joint effort from Disney & Hearst).

According to the EEA, this divestment provision is crucial in the prevention of hurting any competition that might come after the acquisition completes.  You might know H2 as Viceland, which was rebranded in 2006 in the United States.

The reason for this condition is that the European Commission found, in an investigation, that while the combination of Fox and Disney’s film studios would still face strong competition from other major film studios (think Universal, Sony, and Warner Bros, for example), it would actually eliminate competition between two very strong suppliers in the EU.  These suppliers are “factual channels,” which is what the EEA calls programming that contains documentaries and those shows that hinge on science or fact-based narratives.

In order to address competition concerns, then, the EEA ordered Disney to divest its interest in the controlling of “Factual channels. “

This is actually quite similar to what happened earlier this year when the United States Department of Justice granted its regulatory approval for the merger; also on the condition that Disney will divest Fox’s 22 regional sports networks.

Disney followed this up with the release of a statement indicating it hopes to get final approval for this merger in those territories that have not yet reached a verdict. Disney and Fox forecast this deal should close in the first half of next year.  If, and when, the deal finally does go through, it will expand Disney’s character universe to include X-Men, “Avatar” and The Simpsons (among others) who will join the likes of Disney stalwarts like Mickey and Goofy.  And it will add to Disney’s overall entertainment empire, which includes ABC, ESPN, Pixar, Lucasfilm, and Marvel Studios, the Fox properties FX Networks, National Geographic, and more than 300 other international channels.

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