Disney took another step toward acquiring most of 21st Century Fox when the Department of Justice announced Wednesday that the parties had reached an agreement that would grant the deal regulatory approval.
That approval is contingent on Disney selling Fox’s 22 regional sports networks that are part of the deal. Many of those networks compete directly with ESPN, which Disney owns.
The news, which came rather quickly given the typically slow pace of regulatory reviews, further paves the way for Disney to win the bid for Fox assets. The company offered $71.3 billion last week in a mix of cash and stock, countering Comcast’s all-cash offer of $65 billion earlier this month.
Comcast could still counter with a new offer, and several people in the M&A community who spoke with The Washington Post suggested that the possibility that the company would seek additional private-equity sources to finance a higher bid was not out of the question.
Still, many also asked whether Comcast’s balance sheet would be able to weather a transaction above $70 billion and the debt it would entail. The stock market was cool to such prospects, sending the Comcast stock price down just about 1.5 percent on Wednesday.
A Comcast spokesman declined to comment on whether the company would come up with a new offer, which it has not done over the past week. If Comcast were to walk away, Disney and Fox would simply need to secure shareholder approval, which at that point would likely be a formality, for the deal to go through.
Rupert Murdoch, whose family controls 17 percent of Fox shares, is believed to heavily prefer the Disney deal because of the stock factor, which would give him a position in the entertainment giant as well as limit, if not eliminate, his tax liability.
Regulatory approval was not considered a significant obstacle and became less of a concern when the Justice Department lost a battle to stop the merger of an even more difficult regulatory sell in AT&T and Time Warner.
Murdoch agreed in December to sell much of his media empire to Disney, including TV and film studios, National Geographic, Star India and the company’s 30 percent stake in Hulu. At the time, the price was $52.4 billion in an all-stock deal. Fox News and the Fox Broadcasting Network are not part of the deal.
On Wednesday, Disney focused on the regulatory news. “The DOJ has entered into a consent decree with Disney and 21st Century Fox that allows the acquisition to proceed,” it said in a statement.
Makan Delrahim, who runs the Justice Department’s antitrust division, said in a statement: “American consumers have benefited from head-to-head competition between Disney and Fox’s cable sports programming that ultimately has prevented cable television subscription prices from rising even higher. Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”
Under the agreement, Disney would have at least three months to sell the sports networks.