US antitrust regulators on Wednesday conditionally approved Walt Disney's proposed $71.3 billion purchase of key 21st Century Fox assets, boosting the chances for the tie-up to create a new media-entertainment powerhouse.
The US Department of Justice approved the deal subject to Disney selling 22 regional sports networks now owned by Fox. The news moves Disney's proposed buyout one step closer to completion after the entertainment giant last week raised its bid in response to a challenge from cable and media conglomerate Comcast.
However, Disney-Fox is still not a done deal; Comcast was reportedly exploring partnering with another company on a higher bid. Shares of Fox jumped 1.7 percent to $48.50 in midday trading. Disney rose 0.7 percent to $104.96, while Comcast slipped 0.3 percent to $32.67. Disney hailed the decision allowing the company "to resolve the limited potential concerns to position us to move forward with this exciting opportunity that will enable us to create even more compelling consumer experiences."
In reviewing Disney-Fox, the Justice Department said an asset sale was needed because Disney and Fox currently compete to sell cable sports programming in local markets around the United States. The deal would have meant higher prices for these distributors, the agency said. "American consumers have benefitted 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," said assistant attorney general in antitrust, Makan Delrahim. "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." The proposed settlement will be considered by a US federal court for final approval.