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Disney to Accept Divesting of Fox Sports in Brazil and Mexico

Mario Sergio Lima and Andrea Navarro

(Bloomberg) -- Walt Disney Co., on the brink of sealing its $71 billion takeover of 21st Century Fox Inc. entertainment assets, will agree to sell the Fox Sports channels in Brazil and Mexico to win regulatory approval there, according to people close to the discussions.

The companies earlier this week accepted the divestment recommendation of Brazil’s antitrust regulator, and at a meeting next week they’ll present an agreement to pursue the sale, said two of the people, who asked not to be identified because the discussions aren’t public. Competitors have already shown interest in the assets, said a third person.

In Mexico, Disney expects the country’s telecommunications regulator to require the sale of Fox Sports and is willing to agree to it, according to one person. In both countries, the final details of the agreements are still under discussion and it’s possible the situation could change, the people said. It’s unclear, for example, whether regulators will require the companies to sell the rights to sports programming, such as soccer games, in addition to the channels themselves.

The companies didn’t immediately respond to requests for comment, and the regulators declined to comment.

Home Stretch

The two countries are among the last major hurdles for the deal. Disney has agreed to sell Fox’s 22 regional sports networks in the U.S. after the Justice Department said the ownership of those channels and ESPN would give the company undue influence in the sports broadcasting business. The company also will sell its 50 percent stake in A+E Networks in Europe to satisfy regulators there.

Disney faced opposition to the merger from Brazil’s Globo Comunicacao e Participacoes SA, which raised concerns over concentration in sports networks. Mexico’s Grupo Televisa SAB, the world’s largest producer of Spanish-speaking content, and Globo would be their countries’ sole competitors in sports networks if the divestments weren’t made, said the people. The U.S. Justice Department’s decision to demand divestitures also influenced the Brazilian and Mexican regulators, said one person.

Disney Chief Executive Officer Bob Iger failed to get a better deal after flying to Brazil to meet the antitrust board. As a result, the companies decided hanging on to the sports channels wasn’t worth jeopardizing the takeover, said two of the people.

Mexico’s antitrust regulator also looked into the deal, specifically examining movie distribution and merchandise matters, and gave it a green light earlier this month.

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net;Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, John J. Edwards III, Rob Golum

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