Disney-Fox merger approved by Justice Department

The Kingsman franchise is one of Fox's core properties.                  Twentieth Century Fox

The Kingsman franchise is one of Fox's core properties. Twentieth Century Fox

The government's approval likely throws a wrench in Comcast's competing bid for Fox's assets and puts Disney, which owns ESPN, in pole position. The slimmed down 21st Century Fox would retain the Fox broadcast network, Fox News, Fox Sports and Fox Business.

The deal is for 21st Century Fox's assets and will net the buyer a variety of cable channels, such as the popular FX, as well as multiple highly successful film franchises, worldwide TV networks, and similar entertainment offerings.

A strategic investor could team up with Comcast, taking on the U.S. Fox assets that are in play-including the Twentieth Century Fox studio and regional sports networks-while leaving Comcast with global businesses such as European pay TV giant Sky PLC and Star India.

The Justice Department said without the sale of the 22 regional sports networks, the deal may have led to higher prices for cable sports watchers in local markets, where Fox and Disney now compete.

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Walt Disney Co. has won USA antitrust approval to buy Twenty-First Century Fox Inc.'s entertainment assets for $71.3 billion United States on the condition that it sell all 22 regional sports networks owned by Fox, the Justice Department said on Wednesday. Fox declined to comment. But the agency also filed a proposed final judgment that would let the merger proceed if Disney agrees to the DOJ's conditions.

It's not hard to imagine that Comcast executives haven't at least thought about divesting the most core of their assets, as they look to find ways to finance a bidding war that some analysts say could go as high as $90 billion. However, the authorization comes with one big caveat: Disney must sell certain sports networks. Fox News and the Fox Broadcasting Network are not part of the deal.

The Justice Department said that without the divestitures, "the proposed acquisition would eliminate the substantial head-to-head competition that now exists between Disney and Fox and would likely result in higher prices for cable sports programming". Even so, THR cautions that "Comcast is not out of the running quite yet as it could still top Disney's offer".

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