Mexico. The Federal Institute of Telecommunications, IFT, authorized the acquisition by Warner Bros Discovery (WBD) of Warner Media's Mexican subsidiaries, including their respective businesses and operations, and tangible and intangible assets -Mexican Subsidiaries of Warner Media-, as well as the direct-to-consumer distribution of HBO Max in Mexico.
The concentration, initially filed on September 24, 2021, consisted of Discovery, Inc.'s acquisition of the Warner Media Business owned by AT&T, Inc., including foreign subsidiaries and Mexican subsidiaries, as well as the diluted acquisition by AT&T shareholders of shares representing Discovery's share capital, and the renaming of Discovery to WBD.
The IFT and the Federal Competition Commission, COFECE, were considered competent in various digital markets involved, so on November 18, 2021, a competition conflict was initiated, which suspended the merger notification process, and in April 2022 the Second Specialized Collegiate Court notified the IFT of the resolution by which it determined that the IFT is the authority in matters of economic competition to decide on services of production, acquisition, provision, licensing and distribution of audiovisual content that is distributed through Internet platforms (OTT, for its acronym in English), as well as the sale of advertising times and spaces on said platforms.
Discovery and AT&T informed the IFT that on April 8, 2022, they closed the acquisition of Warner Media internationally (Operation International), excluding the acquisition of the Mexican Subsidiaries of Warner Media and HBO Max DTC (Mexican Business), and clarified that for the purposes of the notification made to the IFT and considering that the International Operation had already been closed, the operation notified to this Institute was to be considered as the Mexican Operation.
The IFT Plenary considered it appropriate to analyze and issue a resolution on Operation Mexicana, once it is a notified operation that has not been carried out and on which it is possible to identify its effects separately from those of the International Operation.
According to the analysis carried out by the IFT, in the telecommunications and broadcasting sectors in Mexico, WBD and the Mexican Business coincide in 4 markets:
1) provision and licensing of audiovisual content to providers of the OTT distribution service of audiovisual content;
2) provision of the OTT distribution service of audiovisual content, by subscription;
3) provision and sale of times or spaces for commercial messages or advertising in Restricted Channels, and 4) provision and sale of times or spaces for commercial messages or advertising in the OTT distribution service of audiovisual content.
In these markets, the agents involved do not have high market shares, so the operation is not expected to generate risks to free competition and economic competition.
However, it was identified that WBD participates in the related market for the provision and licensing of audiovisual content to pay-TV service providers in the children's programmatic category, through the cartoon network and Cartoonito channels (formerly owned by Warner Media), as well as Discovery Kids (formerly owned by Discovery), in which it has a substantial share measured in terms of audience. In this regard, the Parties, on a voluntary basis, submitted a proposal for conditions aimed at remedying any risk to competition in that related market, including the following:
- The commitment to attend and negotiate all requests for access to the restricted channels of WBD made by any operator of the Pay-TV service.
- Do not tie or package the Children's Restricted Channels that were owned by Warner Media, with the Discovery Kids Restricted Channel.
- Do not transfer audiovisual content from the Restricted Children's Channels that were owned by Warner Media to the Discovery Kids channel or vice versa.
