Mexico. In June 2018, Disney and Fox announced that they had reached a merger agreement whereby Disney would pay $73.1 billion for the acquisition of 21st Century Fox's operating assets.
Days after the deal was announced, the U.S. Department of Justice's Antitrust Division approved the operation on the condition that Disney sell the 22 sports channels Fox operates in that country.
In Mexico, for the approval of the Disney-Fox economic concentration, the Federal Institute of Telecommunications (IFT) carried out an exhaustive analysis of ten economic activities in the telecommunications and broadcasting sectors. The body ruled that this operation would generate great risks in terms of market concentration and that this would affect the processes of economic competition and free competition of the markets.
In order to ensure the proper functioning of the market and the independence of the offering, the IFT decided to prevent Disney from providing or licensing its content in conjunction with that of Fox Sports and from jointly acquiring or producing content. Therefore, the agency ordered the disincorporation of the Fox Sports channels and all their assets.
The obligation to disincorporate the sports channels owned by Fox, prior to its merger with Disney, seeks to counteract the market concentration of much of the sports content that a single player would hold and that would allow it to manipulate its offers unilaterally. For example, consumers looking for a sports grill with specific content would be forced to hire this service in the absence of relevant alternatives in the market.
Since the IFT ruled in favor of the sale of Fox Sports in March 2019, Disney has been granted several extensions to complete the operation. It took two years for Disney to make such a transaction, during which time the pay-TV sports content market suffered from competitive stagnation to the detriment of audiences.
Now, Grupo Lauman became the owner of Fox Sports, the group that owns other media such as Financiero.
It is expected that now a competitive dynamic will be resumed in this segment that will also have another effect through sports content that is increasingly transmitted through OTT platforms. In this regard, HBO Max will broadcast the Champions League, the most important club league worldwide, other players such as Amazon Prime, Disney+, among others are also exploring niches for consumers of sports content.
Mexican audiences and competing players demand the preservation of diverse and affordable alternatives for access to sports content, for the gestation of a scenario of effective competition and freedom of consumer choice and negotiation of broadcasting rights in the short, medium and long term.
Text written by Gonzalo Rojon of The Competitive Intelligence Unit, CIU.
