Analysis of the Likelihood of Disney Buying 20th Century Fox Amid Regulatory Scrutiny
On the surface, the potential Disney-20th Century Fox merger seems like a contentious issue, provoked by the selling off of the Fox Empire and the resultant market concentration. Nonetheless, this analysis suggests that the deal is more likely to proceed than face significant regulatory hurdles, although there are potential issues that the Justice Department may scrutinize.
Regulatory Considerations and Potential Snags
The Justice Department's (DOJ) approval appears likely, considering that the deal stipulated that certain parts of Fox were intentionally left out. Specifically, Disney is not acquiring the Fox television network and the stations it owns, which would have raised red flags under media consolidation regulations. Consolidating Fox News and Fox Business with ABC's news operations would have been a significant concern for regulators regarding concentrated control over news delivery, which could be especially critical during a politically charged time in Washington.
Disney's acquisition of additional cable networks, including several Disney channels and the Fox network's movie channels, adds to their content library without making them the largest player in the market. However, this deal might raise concerns with media unions, particularly the Writers Guild, who see fewer venues available for creative content production. Additionally, the Internet-based content distributors such as Netflix and Amazon are already producing content in-house, reducing the impact of this consolidation for them.
The acquisition of Hulu controlling stake presents a unique situation. While Disney will have a significant content library and control over online distribution platforms, they will not be the dominant player in this space. Netflix and Amazon continue to hold substantial market shares, and the diversity of other streaming services provides a competitive environment. However, the merged entity could impact the distribution dynamics of online and streaming content.
Impact on Sports and Broadcasting
In the sports broadcasting sector, the acquisition of 24 Fox regional sports networks by ESPN through this deal could embolden competitive negotiations with cable and satellite providers. Despite this, ESPN's competitors, such as FS1, FS2, and the major TV networks, still have considerable influence. The rise of Internet-based sports content distribution platforms, exemplified by Thursday Night Football on Amazon Prime, adds another layer of complexity to the media landscape. This shift raises questions about whether the increasing power of a few entities in sports broadcasting is truly problematic.
Conclusion and Regulatory Endgame
Overall, the Disney-20th Century Fox merger appears to be well-crafted to avoid major regulatory issues. However, the potential for regulatory retaliation remains. The final decision will likely hinge on political considerations and whether any regulator feels like pursuing a counterproductive move to address hypothetical concerns.
Regulators will scrutinize the deal but are more likely to approve it, given the strategic exclusions and the competitive landscape. The potential long-term impact on content diversity and market dynamics will continue to be a focus, especially as technology continues to shape the media industry.