Mexico. In recent months, the US Department of Justice endorsed the purchase of 21st Century Fox by The Walt Disney Company, an operation announced in December of last year and valued at just over $71 billion. With this, two giants of production of cinematographic and television audiovisual content are consolidated.
As it is an operation that integrates two companies that produce similar goods (horizontal integration) and that would reduce the number of competitors in the market, it is up to the regulatory bodies in the world to analyze and evaluate the market power that this new conglomerate would achieve against its competitors, suppliers and distributors.
Such is the concern that the U.S. DoJ banned the incorporation of news channels, local television stations and particularly, its division of Fox sports channels in that country. Similarly, authorities from different latitudes reacted. The European Commission ordered its separation from several cultural channels.
In Brazil, the Administrative Council of Economic Defense (CADE) determined that due to the high levels of audience reached by its sports channels, it would hold a position of advantage in this segment, relative to its competitors. This circumstance would lead to adverse effects for the distributors of its contents, the cable operators, but above all it would generate effects on consumers.
In Mexico, with every opportunity, the Federal Consumer Prosecutor's Office (PROFECO), through its Deputy Attorney General's Office for Telecommunications, anticipated and warned about the potential effects that the Disney-Fox merger would bring to the sports content segment. In this regard, it was found that with its channels "Fox Sports" in the case of Fox and "ESPN" of Disney, sports content is offered that is transmitted exclusively through its programmatic offer and that the economic group resulting from its integration "would be in a position of greater bargaining power and advantage over the service providers, who would have few alternatives to accepting the commercial terms that Disney/FOX imposes."
This is because the conglomerate would concentrate 31.3% of the sports signals transmitted in Mexico, a reason markedly higher than that reached by its main competitors, such as Sky (12.5%) and Grupo Televisa (10.4%).
Likewise, there is concern about the impact that could be generated for current audiences and subscribers of Fox Sports content, as they are forced to hire for a greater expense, content that today is included in the contracted programming. This from the introduction of the channel and platform called "Fox Sports Premium" (FSP), Fox's on-demand option that aims to launch at the beginning of 2019 with an additional cost of $ 139 pesos per month.
In several of the markets in which it already operates, FSP has moved programming that was previously included in pay-TV packages to move to this alternative, but at an extra monthly cost.
The above is relevant in light of the fact that Fox Sports has exclusive rights to several soccer teams and tournaments in Mexico and the world. Sport that registers a great hobby in our country.
Given these potential effects on the sports content market, it is a matter of competence of the corresponding bodies in Mexico, the IFT and COFECE, the definition and implementation of the specific necessary conditions applicable to this merger to safeguard the interests of Mexican consumers, level the negotiating power with Pay-TV operators and other content distributors, as well as to preserve a competitive playing field in the market.
Text written by Ernesto Piedras of The Competitive Intelligence Unit.
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