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From Antitrust Law Daily, November 6, 2018

EC approves Disney’s proposed acquisition of Fox studios and cable television business

By Jody Coultas, J.D.

The European Commission (EC) has approved the proposed acquisition of parts of Twenty-First Century Fox by Disney, in light of Disney’s commitment to divest its "factual channels," such as the History and Lifetime channels. Because the proposed transaction would have eliminated competition between two strong suppliers of "factual channels" in several European countries, the transaction could not go forward without the commitments to fully remove the overlap between Disney's and Fox's activities in the wholesale supply of factual channels, according to the EC.

Disney and Twenty-First Century Fox, Inc., two of the six major Hollywood film studios, are global media companies active in the theatrical distribution of films and the operation and wholesale supply of TV channels. The companies provide TV channels such as the Disney Channel, the Fox channels, the National Geographic channels and the History channels. In the European Economic Area (EEA), Disney and Fox are active as providers of audio-visual content and TV channels to TV broadcasters and distributors.

The proposed transaction, notified to the EC on September 14, included the acquisition by Disney of Fox’s film and television studios and its cable and international television businesses. The Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network are not part of the transaction.

Following an investigation of the proposed transaction, the EC found that it did not raise competition concerns related to the production and distribution of films for release in movie theatres and distribution of content for home entertainment and licensing of films and other TV content. The merged entity would continue to face significant competition from other studios, such as Sony, Universal, and Warner Bros.

However, the EC found that the proposed transaction would eliminate competition between two strong suppliers of "factual channels" in several EEA Member States. Factual channels are channels which mainly broadcast documentaries, drama, and scientific-themed entertainment programs, such as the National Geographic channels and the History channels.

To address the EC’s competition concerns, Disney committed to divest its interest in all factual channels it controls in the EEA, namely: History, H2, Crime & Investigation, Blaze, and Lifetime channels. These channels are currently controlled by A+E Television Networks, which is a joint venture between Disney and Hearst. The commitments fully remove the overlap between Disney's and Fox's activities in the wholesale supply of factual channels in the EEA.

Earlier U.S. approval. In June, the Department of Justice announced that Disney agreed to divest 22 Regional Sports Networks in order to resolve U.S. antitrust concerns over its acquisition of the Fox assets. The Justice Department questioned the deal’s impact on prices for cable sports programming licensed to multichannel video programming distributors.

Companies: Disney, Twenty-First Century Fox, Inc.

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