Mexico. The Federal Institute of Telecommunications, IFT, approved The Walt Disney Company (Disney) and Twenty-First Century Fox, Inc. (21CF) a 6-month extension to the disincorporation period to sell the Fox Sports business in Mexico.
The order to disincorporate the Fox Sports Business in Mexico is one of the conditions imposed on March 11, 2019 by the IFT Plenary to authorize Disney to acquire assets of 21CF.
The order to disincorporate the Fox Sports Business in Mexico responded to the fact that, prior to the merger, both Disney and 21CF had significant stakes in the pay-TV sports channels market, which together would have accounted for approximately 70%, according to audience data in 2017.
To comply with this obligation, the IFT Plenary:
(a) Ordered the parties to leave the administration of Fox Sports to an Independent Administrator; the steps for the effective disincorporation of a Disincorporation Agent, and the audit functions for the fulfillment of all the conditions in charge of an Independent Auditor.
b) Granted a period of 6 months, extendable for a single occasion and an equal period, to carry out the disincorporation, for which the Parties would have to submit the request for extension, as well as prove that there is justified cause to request it and that the Fox Sports business in Mexico is completely separate, independent and viable. Likewise, the best effort of the Disincorporation Agent to sell the business to Disincorporation must be accredited.
From the information provided by the Parties and the Independent Auditor, the IFT determined that the request for an extension complies with the requirements set out in the resolution:
• The request for Extension was delivered within the period established in the resolution;
• All Fox Sports assets in Mexico are fully identified and separated;
• Fox Sports in Mexico is and maintains completely separate, independent and viable, and
• The best effort of the Disincorporation Agent to sell the Fox Sports Business in Mexico is accredited, since the agent has demonstrated the existence of potential buyers who require more time to know and review the business to be disincorporated.
The first period of 6 months granted for the Disincorporation comprised from May 1 to November 1, 2019. With the extension, the disincorporation period is extended to May 1, 2020.
In the case of the sale of the Fox Sports Mexico business, the Resolution establishes that potential buyers must have prior authorization from the Institute to prevent such acquisition from generating risks to the process of competition and free competition.
