It’s been reported that that the U.S. Justice Department has altered its position on The Walt Disney Company’s acquisition of the 22 Fox regional sports networks, and are considering a scenario that would allow Disney to cede operation control and spin-off the cable stations.
The DOJ had initially mandated that Disney sell-off the sports networks within 90 days of the Fox entertainment deal closing to prevent a sports broadcasting monopoly; corporate subsidiary ESPN already controls the rights to more sports content than any other broadcaster.
The news comes just days after New Fox – the perceived front-runner to take down the lot of cable assets – confirmed in an SEC filing that it would not be bidding on any of the networks.
Disney is maintaining that it’s committed to a sale before the end of February.
The DOJ initially felt that if Disney were to add the broadcast rights to 44 pro sports teams to ESPN’s existing portfolio, that the company would be positioned to squeeze carriers in carriage negotiations; further driving up the cost of the cable bundle.
While I don’t want to speculate as to why the DOJ is reportedly willing to reverse direction, there is a belief in industry circles that without Disney or Fox backing the RSNs – and the leverage they bring to negotiations – cable companies would opt to leave the costly networks off their basic tiers.
The Justice Department’s change of heart could end up saving Disney billions.