Antitrust Chief Comments on Disney, Fox’s ‘Surgically’ Designed Deal

As Fox investors prepare for a July 10th vote on The Walt Disney Company’s acquisition of 21st Century Fox properties and Comcast may attempt to outbid them with a larger cash offer, some remarks from Makan Delrahim of the U.S. Department of Justice’s antitrust division may lend a clue as to how the finale to this epic corporate drama will finally unfold.

21st Century Fox initially decided to sell to Disney due to a belief that they would have fewer issues passing regulatory inspections than with Comcast. This strategy largely stems from the Department of Justice’s ongoing attempts to halt AT&T’s $85.4 billion acquisition of Time Warner. At this point, any consideration by Disney shareholders of a more substantial Comcast bid would take this AT&T deal’s success into consideration.

Delrahim, assistant attorney general for the antitrust division, continued to support his team’s decision to block the merger on Thursday at The Deal’s annual corporate governance conference in New York, according to The New York Times. When it comes to the success of the Disney/Fox acquisition, however, his opinion was a bit more positive.

We will see what the investigation shows. (Disney) didn’t propose to acquire Fox Sports 1 and 2. They didn’t acquire Fox Broadcasting and say, you know what, we will combine this with ABC and don’t worry about it we’ll have an arbitrator decide if prices for advertisers go up or competition for content creators goes down. They had good advice and carved out surgically … a transaction that might be doable. But again, who knows where that transaction leads.

Delrahim’s continued distaste for the AT&T/Time Warner acquisition and lack of criticism regarding Disney and Fox does not bode well for Comcast’s chances on a successful outbid. This is just one comment though, and nothing is set in stone until Fox investors have placed their votes on July 10th.

Sources: Reuters, The New York Times