FOXA/DIS/CMCSA: DOJ Conducting Thorough Review of Comcast Bid; Deal May Entail Lower Antitrust Risk

Event Driven Takeaways

  • After having conditionally approved the Fox/Disney transaction last week, the DOJ plans to take its time in conducting a thorough antitrust review of a rival Comcast bid, according to a person familiar with the matter.
  • One potential sticking point for Fox/Comcast lies in the combined company’s integration of its content portfolio with its provision of cable and internet services, or ISP. Comcast could leverage its dominant position in the cable and broadband space to prioritize distribution of Fox’s content and Comcast’s own array of entertainment and sports channels held by its NBC business over other rivals.
  • Yet Comcast and other traditional ISPs will likely see intense competition from mobile network operators in the provision of high-speed internet services to American homes. Based on this trend toward a 5G world, it is not clear that Comcast’s traditional fiber optic network alone would hold the power to disadvantage content rivals of Fox.
  • The companies will, however, likely face antitrust concerns regarding their combined portfolio of regional sports networks, particularly in California, where the combined company would have control over primary TV rights for local teams in Sacramento, San Francisco, Los Angeles and San Diego.

With the Walt Disney Company on Tuesday receiving conditional U.S. antitrust approval for its Twenty-First Century Fox merger, Fox shareholders must now decide whether that deal or an as-yet-unapproved Comcast bid would hold greater value. Fox last week announced its rescheduled July 27 shareholder vote on the Disney deal, giving Fox shareholders a month to decide between the antitrust-approved Disney bid