IMG College, Learfield, schools wait as Justice weighs merger
The merger between Learfield and IMG College is now before the Department of Justice for regulatory approval, industry sources say.
Both companies anticipated that the merger would undergo a full inspection because they own the collegiate multimedia rights to so many schools, particularly among those in the power five conferences. Together, Learfield and IMG College would own the multimedia rights to 200 schools, including 56 of the 65 at the highest level, if the merger is approved.
But the question is whether the combined company after such a mega-deal might be perceived as a monopoly. The merger, while signed by both companies, cannot officially close until it is cleared by the DOJ.
“Does it negatively impact competition? That’s the real question,” said Greg Skidmore, an attorney who specializes in antitrust cases with Charlotte-based firm Robinson Bradshaw. “Does it lead to higher prices? Does it make it harder for competition to enter the marketplace? These are the things they’ll look at. … It’s all well and good to say there are competitors, but do they have a realistic shot?”
The current competition for collegiate multimedia rights includes Fox Sports, JMI Sports, Outfront Media Sports and Van Wagner Sports & Entertainment.
The Justice Department review panel will consist of attorneys and economists, Skidmore said, and they’ll seek testimony from industry experts in the space, including athletic directors, to get their opinions on the case.
It’s uncertain how long the DOJ will need to do the review. When IMG acquired ISP Sports in 2010, the DOJ took nearly four months to clear the deal, although ISP was required to divest its ownership of Licensing Resource Group, a collegiate licensing agency.
At the time, LRG was the only substantive competition to Collegiate Licensing Co., the industry leader and an IMG business. Companies are sometimes instructed to sell off some of their assets to gain regulatory approval.
Skidmore and other industry experts say that Republican presidential administrations are typically friendly to mergers, so a Trump administration, given his business background, would theoretically lean in favor of a deal like this. But Trump also publicly came out against the AT&T-Time Warner merger during his campaign last year.
Additionally, the DOJ’s antitrust division is under new leadership, which presents some uncertainty. Makan Delrahim was confirmed as assistant attorney general for antitrust on Sept. 27, so the Learfield-IMG College merger is one of the first cases he’ll see. He’s also reportedly deeply involved in the AT&T case, which is ongoing.
“It’s too soon to tell because this administration has been much slower than others to fill appointments,” Skidmore said of how this administration might view large mergers. “It’s hard to know what the priorities will be, but it’s a fairly safe bet that … generally speaking, Republican administrations are friendlier to mergers.”
Learfield and IMG College, of course, contend that their union will be beneficial to college sports and their client schools.
In the press release announcing the merger last month, Learfield President and CEO Greg Brown tried to get ahead of the debate by saying: “This combination will enable a better, more innovative future for collegiate athletic programs and their fans. By combining, we will be better positioned to champion the success of collegiate athletics.”
Brown will oversee the merged business. Until the merger is approved, Learfield and IMG College continue to operate as separate companies, they say.