The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of parts of 21st Century Fox by Disney. The decision is conditional on full compliance with commitments offered by Disney. The deal was cleared by US regulators at the end of June 2018.
Disney and Fox are two of the six major Hollywood film studios. Both companies are also providers of TV channels such as the Disney Channel, the Fox channels, the National Geographic channels and the History channels. In the European Economic Area (EEA), Disney and Fox are active as providers of audio-visual content and TV channels to TV broadcasters and distributors.
The proposed transaction would combine Disney and parts of Fox, including its film and television studios and its cable and international television businesses. The Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network are not part of the transaction.
The Commission examined the effects of the proposed transaction on the markets where the activities of the two companies overlap.
In relation to (i) production and distribution of films for release in movie theatres and (ii) distribution of content for home entertainment and licensing of films and other TV content, the Commission found that the combination of Disney’s and Fox’s activities would raise no competition concerns because the merged entity would continue to face significant competition from other players, such as Sony, Universal and Warner Bros.
In relation to the (iii) wholesale supply of TV channels, the Commission found that the proposed transaction would have eliminated competition between two strong suppliers of ‘factual channels’ in several EEA Member States, such as the National Geographic channels and the History channels.
To address the Commission’s competition concerns, Disney committed to divest its interest in all factual channels it controls in the EEA, namely: History, H2, Crime & Investigation, Blaze and Lifetime channels. These channels are currently controlled by A+E Television Networks, which is a joint venture between Disney and Hearst.
The commitments fully remove the overlap between Disney’s and Fox’s activities in the wholesale supply of factual channels in the EEA.
Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The Commission’s decision is conditional upon full compliance with the commitments.