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Volume 21 No. 26
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What’s next for Learfield-IMG College deal

Learfield and IMG College cleared one major hurdle last week when both sides signed a deal to merge their collegiate businesses. Now comes the next hurdle: gaining regulatory approval from the U.S. government.

Never before has one company brought the multimedia rights to so many schools under one banner. Once merged, Learfield-IMG College will own the rights to 56 of the 65 schools in the power five, giving them 86 percent of the most valuable marketing and media rights in college sports.

Learfield and IMG College contend that their union will be beneficial to college sports and their client schools by adding value that, until now, has been unrealized, especially compared to the professional leagues. But, to what extent will one completely dominant company restrict competition? Industry experts in antitrust law say the regulatory process will ask that question and more.

“Will the effect of the merger substantially lessen competition in the market?” asked Dan Crane, a law professor and antitrust expert at the University of Michigan. “They would determine how many firms compete in that market, and whether other firms might enter.”

At some point after they sign the deal, Learfield-IMG College will fill out the Hart Scott Rodino (HSR) form, which outlines details of the two companies. That form is filed to the Premerger Notification Office within the Federal Trade Commission. The case is then assigned to one of the government’s two antitrust enforcement agencies — the FTC or the Department of Justice.

When IMG acquired ISP Sports in 2010, the deal was assigned to the DOJ.

Once the deal is assigned, a 30-day clock begins ticking for the review. The merger can be cleared, meaning the deal is approved, or it can be designated for a Second Request, meaning the government wants more details. From there, a staff of attorneys and economists would do a deeper dive into the merger, a process that can take up to three to six months.

They will work with the two companies and other industry experts to identify competition and determine what sector they’re in. For example, is the merged Learfield-IMG College defined narrowly as a collegiate multimedia rights company, or more broadly as a sports entity, like a team or league, or a sports media company, such as ESPN or Fox.

A name for the newly merged company has not been announced, but Learfield CEO and President Greg Brown will carry the same titles into his role as leader of the combined business, upon federal approval. The merged company will be headquartered in Learfield’s Plano, Texas, office.

Until the deal is approved and closed, Learfield and IMG College will continue to operate separately. IMG and Atairos, which owns Learfield, will retain ownership of the new entity. Silver Lake, a long-term investor in WME-IMG, will acquire a minority stake in the combined business through a new capital investment.