Joining Disney and Fox's sports channels may raise antitrust concerns: experts
Walt Disney Co`s
"Any combination of sports programming is going to trigger significant scrutiny. They`ll look at the competition between ESPN and the regional sports networks," said Caroline Holland, a veteran of the U.S. Justice Department`s Antitrust Division.
Disney announced earlier on Thursday its $52.4 billion purchase of Twenty-First Century Fox`s
Holland antitrust regulators would want to know if a more powerful Disney sports franchise would give it the clout to raise prices for cable operators and internet television providers like Sling TV. "Regional sports is often must-have content," Holland said.
Five antitrust experts said this week the deal would likely win approval from the U.S. Justice Department, which is expected to review the deal since they have reviewed other content deals, although the agency may require asset sales or conditions.
Walt Disney Co. declined comment for this story.
Still, regulators are expected to focus on sports programming since Disney`s ESPN is already a leading sports channel with 88 million U.S. subscribers and the rights to show professional basketball, football and baseball and some college football as well as some major U.S. tennis and golf tournaments, antitrust experts said.
That market position would be considerably enhanced with Fox`s 22 regional sports channels, which have some 61 million subscribers. They broadcast 44 of 81 U.S. professional baseball, basketball and hockey teams.
Fox acknowledged competition between ESPN and Fox sports in a 2015 government filing. In it, Fox said that ESPN`s programming targeted the audiences of Fox Sports 1 and the regional sports networks, among others.
"Market power over sports programming and bundled packages could be used to drive up prices to mvpd/cable (pay-TV) and internet distributors," said Gene Kimmelman president of the advocacy group Public Knowledge.ANTITRUST IN THE MOVIES
While the deal would make Disney the top movie studio, as measured by ticket sales, antitrust regulators may view that dominance as less relevant because the top spot is easily lost if other studios have a good year and Disney has a poor one, said an antitrust expert who spoke privately to protect business relationships.
Another antitrust expert, who also asked not to be named to protect business relationships, expressed scepticism about a second possible concern that Disney, as a majority owner of Hulu, would refuse to license movies and TV shows to Hulu`s internet rivals.
Hulu`s subscription price was low enough that Disney was unlikely to be tempted to stop the lucrative practice of licensing its content to other internet video providers, said Herbert Hovenkamp, who teaches at the University of Pennsylvania Law School.
"If Hulu decides to not offer something to others, they might shoot themselves in the foot. It`s not obvious to me that they could leverage Hulu," said Hovenkamp.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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