Today, Walt Disney Co. announced a deal to acquire significant programming assets from 21st Century Fox Inc. The deal would unite two substantial content companies and mark the second media mega-merger to face antitrust scrutiny next year. Public Knowledge contends that this merger may pose harms to competition and consumers by further consolidating must-have programming assets and major motion picture studios, and ultimately leading to consumers paying higher prices for video content.
The following can be attributed to Phillip Berenbroick, Senior Policy Counsel at Public Knowledge:
“Antitrust authorities should thoroughly examine the incentives and power a combined Disney-Fox may have to harm consumers and competition.”
“Disney’s proposed acquisition of Fox’s assets would combine two of the largest film and television production studios, combine Disney’s ESPN-family of networks with Fox’s regional sports cable channels, add valuable cable channels to Disney’s stable of must-have cable programming, and give Disney a controlling stake in the Hulu streaming video service.
“With the addition of the Fox properties, Disney may have the power to increase programming costs for consumers by leveraging higher prices for Fox content from cable, satellite, and internet-delivered video programming distributors. Owners of valuable cable programming packages already have significant power to drive up the costs of the consumer cable bundle by demanding inclusion of their programming, and by excluding independent and diverse competitors.
“Disney’s acquisition of Fox’s regional sports networks, which carry thousands of local NBA, MLB, and NHL games, as well as college athletics, is also a cause for concern. Disney’s ESPN-family of networks is already the most valuable, and most expensive, sports programming network in the cable bundle. The addition of Fox’s regional sports programming may significantly increase Disney’s bargaining power over local cable providers because consumers demand access to their local professional and college athletics. The combination of these assets may also give Disney the power to negotiate even higher prices and more preferential treatment for the rest of its video programming, as well as unprecedented control over both national and local televised sports.
“Additionally, Disney’s control over Fox’s movie studio may give the combined firm more power to increase the price that cinemas pay to show Fox and Disney-produced films, as well as give it leverage to demand screens for its films and favor its own online movie distribution while excluding those of other studios and independent filmmakers. Moviegoers may have fewer and less diverse film choices — and eventually bear the these higher costs at the ticket booth.
“The Department of Justice’s careful review and resolution of this transaction should ensure that consumers don’t pay higher prices or have fewer choices for video programming as a result of horizontal consolidation, or the combined firm’s expanded market power to squeeze upstream and downstream segments of the production and distribution chains.”
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