The Walt Disney Company has agreed to offload the local Fox Sports operation, as mandated by the antitrust regulator CADE, for securing Brazilian clearance for its Fox transaction.
Earlier, the CADE has cleared the Disney-Fox merger in Brazil pending the sale of Fox Sports. CADE was concerned that Disney, owner of ESPN, would have too much market power if it retained the Fox Sports operation in Brazil, which in turn might affect the consumers interest.
“In addition, there would be potential for reducing the quality and diversity of available sports content, as well as increasing costs that could be passed on to consumers,” CADE says.
“The sale of the Fox Sports channel aims to allow the market structure to remain with the same competitive pressure prior to the merger, with the continuation of three sports channel options for consumers in Brazil: Sport TV (GloboSat), ESPN and a new company with the assets of Fox Sports.”
The sale would include Fox Sports’ broadcast rights, contracts with operators, real estate and transmission equipment. CADE has not disclosed the deadline for the divestiture.
Under the terms of the clearance, Disney is limited—for an undisclosed period of time—from licensing sports rights held by Fox Sports and from repurchasing the assets being off loaded. It has also committed to licensing the Fox Sports brand for free to the buyer.