WASHINGTON (Reuters) – Walt Disney Co won U.S. approval to buy Twenty-First Century Fox Inc entertainment assets for $71.3 billion on condition it sell Fox’s 22 regional sports networks, the Justice Department said on Wednesday, giving Disney an edge over Comcast Corp’s competing bid.
The Fox movie franchises and TV shows have been the subject of a bidding war between Disney and Comcast, both of which want to expand their own entertainment businesses to compete with fast-growing digital rivals Netflix Inc and Amazon.com Inc.
The deal does not include the nationally broadcast Fox News, Fox Business or Fox Sports networks.
If Disney prevails over Comcast, the combination would expand Disney’s unrivaled portfolio of some of the world’s most popular characters, uniting Mickey Mouse, Luke Skywalker and Marvel superheroes with Fox’s X-Men, “Avatar” and “The Simpsons” franchises.
Disney owns ABC, Pixar, Marvel Studios and “Star Wars” producer Lucasfilm, plus an array of theme parks. The Fox assets being acquired include a cable group that includes FX Networks, National Geographic and 300-plus international channels plus Fox’s stake in Hulu.
Disney, which also owns sports network ESPN, has agreed to divest all of Fox’s regional sports networks, which provide sports programing for regional and local markets, such as Fox’s YES Network, which airs New York Yankees baseball games around the New York metro area.
Together, Fox’s regional sports networks have about 61 million subscribers and have rights to broadcast live games of 44 of 91 U.S. professional sports teams in three of the four major sports leagues.
The Justice Department said that without the divestitures, “the proposed acquisition would eliminate the substantial head-to-head competition that currently exists between Disney and Fox and would likely result in higher prices for cable sports programing.”
Disney’s agreement with the government could be a setback for Comcast, which has yet to respond to Disney’s latest offer for Fox, unveiled last week. Comcast, whose offer is worth $65 billion, declined to comment.
Fox also declined to comment.
Disney said it was “pleased” with the agreement reached with the Justice Department and said it looked forward to creating “even more compelling consumer experiences.”
Analysts have antitrust concerns about Comcast’s competing bid, which would add Fox’s movie and TV studios to Comcast’s NBC Universal. Chief Executive Brian Roberts had said that Comcast was willing to offer the same conditions as Disney and promised to fight for the deal in court if necessary.
The sports networks could attract a variety of bidders among technology and media companies looking to get their hands on live sports, sources said, although the industry-wide growth of these local sports networks has declined in the past few years as more viewers cut the cord on traditional cable packages.
Reporting by Diane Bartz and David Shepardson; Additional reporting by Liana Baker; Editing by Jeffrey Benkoe, Marguerita Choy and Richard Chang