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Disney-Fox Deal Runs Into Slight Snag in Brazil

Disney Buys 20th Century Fox

Brazil's regulators may slightly hold up the mega-deal between Walt Disney and 21st Century Fox. As soon as the intention to sell Fox became known, Disney quickly became the front runner to buy the vast TV and film assets the studio held. Comcast attempted to intervene and buy Fox themselves, but they simply forced Disney to up their bid to $71 billion in the process.

In the months that have followed, Disney and Fox have been seeking regulatory approval from around the world in order to make the deal official. The Department of Justice already approved the deal in the United States and additional countries have done the same since. China was the most notable and recent country to give their approval of the deal without any conditions, leaving Brazil and Mexico as two of the biggest countries yet to make a decision. It is the lack of a decision by Brazil that appears to be slightly holding up the deal.

Related: A Complete Timeline of the Disney-Fox Deal

In a new report from Bloomberg, they revealed that Disney CEO Bob Iger traveled to Brazil recently to try and push the deal forward and gain approval from Brazil's antitrust regulator Cade, but was unsuccessful. The lack of a deal is reportedly due to a split belief within Cade regarding Disney's potential sports monopoly, as they'll soon own both ESPN and Fox Sports. Cade has not yet decided when their decision will be announced, but March 17 is the legal deadline at this point. The group reportedly has a meeting coming up on February 27 and an extension to the deadline will likely be requested if an agreement isn't discussed then.

Disney Fox deal

As troubling as this hold-up may seem, it could be solved fairly quickly if Disney's sports programming is the biggest hurdle. When the Department of Justice approved the deal last summer, they did so with the condition that Disney had to sell the 22 regional Fox Sports channels they'd acquire. Since Disney already owns ESPN, regulators are looking to prevent Disney from creating a monopoly in the sports broadcasting world by owning two different major networks. Disney has 90 days from the completion of the Fox deal to sell their domestic Fox Sports channels, so Brazil could just make the same condition.

This small snag with Brazil may be why estimate completion dates for the Disney-Fox deal continue to be slightly moved back too. There was previously some optimism by Disney that the deal could close at the beginning of 2019, but it is now expected to close in June of this year. As long as Brazil and other countries give their approval in the coming weeks and months, then this new June estimate may be a worst case scenario. However, if Brazil decides to delay their decision, then the Disney-Fox deal may take even longer to complete.

Source: Bloomberg

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