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Volume 24 No. 176
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Disney-Fox Deal: Could Regulators Step In Over Sports? Is ESPN/RSN Spinoff Possible?

Disney with a potential acquisition of many 21st Century Fox properties could “have some antitrust issues" with ESPN linking up with Fox' stable of RSNs, according to David Faber of CNBC. CNBC’s Jim Cramer added the RSNs "would fit in really well" with ESPN and Disney's recently-acquired streaming platform, BAMTech. Cramer said observers will "now hear talk that if Disney really feels that there's a problem with ESPN," Disney could combine ESPN with the RSNs and potentially "spin it off to shareholders" for a separate media unit. Cramer said Disney Chair & CEO Bob Iger is “doing what you need to do when people don't think that your company has a vision. He's giving you a vision and he’s giving you a narrative and I've always said bank with him. He will figure it out” (“Squawk on the Street,” CNBC, 12/12). In N.Y., Barnes & de la Merced note Disney acquiring Fox' RSNs and its movie studio are the "biggest governmental hurdles" it could face. But a potential Disney-Fox deal, which could be made official as soon as tomorrow, could "supercharge Disney’s global streaming-service ambitions, threaten to undercut Silicon Valley’s entertainment aspirations and most likely prompt further consolidation in Hollywood." MoffettNathanson co-Founder Michael Nathanson said, "For Hollywood, it begs for more consolidation. ... What happens to CBS and Viacom?" (N.Y. TIMES, 12/13). 

LOCAL NEWS: The WALL STREET JOURNAL's Elizabeth Winkler writes if a Fox-Disney merger "runs afoul of regulators, sports will likely be their focus." Fox' 22 RSNs are worth roughly $23B in enterprise value, which "makes them nearly a third of the total value" of the deal. The RSNs would give Disney a "conspicuously dominant sports portfolio." The issue would be "how much more dominant would Disney be" after getting the Fox RSNs (WSJ.com, 12/13). USA TODAY's Eli Blumenthal writes it is "unclear whether Fox will also retain" stakes in networks like Big Ten Network and Fox Deportes. But for the RSNs, adding Fox' stable, which has rights to 44 of 81 MLB, NBA and NHL teams, would "help make ESPN's planned 2018 streaming service more attractive to sports fans that want to 'cut the cord'" (USA TODAY, 12/13). Pivotal Research analyst Brian Weiser said of possible monopoly concerns with ESPN adding the RSNs, "That's compensated by the fact that when rights deals are going to be negotiated in a few years, all of the tech companies will be bidding on rights" (DEADLINE.com, 12/12).