The American Cable Association has a problem with how the Justice Department resolved its antitrust issues with Disney's purchase of Twenty-First Century Fox assets, including, at least temporarily, its 20 regional sports networks (RSNs), Prime Ticket and the YES network.
Justice is requiring Disney to spin off those sports assets. The only stipulation about the buyers are that they be able to compete in the business of supplying video programming with Disney and that the terms of the deal don't allow Disney to interfere with that competition. But ACA says that without some additional caveats on the buyer, the spinoffs could create a new and "equally significant" antitrust issue on two fronts.
Disney has 90 days from the close of the deal, which is expected as early as January 2019, to sell the sports assets to a buyer acceptable to Justice, though the agency can grant one or more extensions up to another 90 days in total. But Disney had to agree to try and sell them as expeditiously after the close as possible.
The cable operators are telling Justice it should not allow the divestiture of the RSNs to either an owner of any Big Four network-affiliated-station in the same market as the RSN or to an MVPD that owns a cable system in that market.
Allowing another network owner--Disney owns ABC--would create the same antitrust problem as letting Disney hang on to the RSN, ACA argues, which means a single company able to threaten two kinds of must-have programming, the broadcast affiliate and an RSN with rights to local sports teams, which would raise MVPD license fees.
It also said allowing such same-market purchases would be the same sort of vertical integration Justice cited in (unsuccessfully) suing to block the AT&T-Time Warner deal, which it is still trying to block in an appeal of that lower court decision. That would be giving the combined entity more leverage to withhold RSN programming than a stand-alone owner.
"While divestiture of Fox’s RSNs to a broadcaster would replicate the problem that the Division identified in this proceeding," ACA told Justice, "divestiture to a same-market MVPD10 would replicate the problem the Division identified in seeking to block the AT&T-Time Warner merger—a vertical combination of Fox’s RSN programming and MVPD distribution will lead to price increases."
One of the problems with a Disney-Fox combo that Justice identified was combining the powerhouse sports outlet ESPN with the Fox RSNs, but ACA argues that a local broadcaster usually has local rights at least as important as ESPN.