The Disney and Fox merger seemed to be moving along as expected with its target completion date of January 1st 2019 in its sights — that is until the deal hit a regulatory snag in Brazil earlier this month. Now, regulators in Mexico are questioning how the merger will affect the country’s cable industry.
The primary cause of concern for the regulatory body in Mexico will be Disney’s increased portfolio of sports content. According to Mexican newspaper El Universal, Disney would own nearly 30% of the programming in the market while companies like Warner Brothers and Universal owning substantially less content at 15.12% and 11.45%, respectively.
Stateside, the merger received conditional approval from the Department of Justice and Securities and Exchange Commission dependent of Disney’s ability to sell the regional sports networks acquired in the merger. Disney had begun shopping all regional sports networks around, hoping to find one buyer to purchase all 22 networks, to no avail. Earlier this week, the New York Post had reported that Disney will likely be forced to break the networks into groups to make them more affordable for potential buyers.
As the Post points out, the regional sports network (RSN) business is on a rather sharp decline compared to the other businesses Disney acquired from Fox.
“The RSN business is not a growth business, but a declining business,” one RSN expert told the Post. “There are a lot of subscriber defections [along with the rest of cable] and the RSNs do not own the digital rights.”
As far as the hurdles in Mexico, it appears that an anticipated price increase is one part of the holdup. El Universal reports that television prices could increase upwards of 20% as a result of the merger — a pretty steady increase for cable packages anywhere across the world.
Read more here. We’re watching this one with interest!