Disney and Fox Merger Hits a Snag in North America

The highly-anticipated Disney and Fox merger had been moving along rather smooth until it hit a [...]

The highly-anticipated Disney and Fox merger had been moving along rather smooth until it hit a regulatory snag in Brazil earlier this month. Now, regulators in Mexico are questioning how the merger will affect the country's cable industry.

The primary cause of concern for the regulatory body in Mexico will be Disney's increased portfolio of sports content. According to Mexican newspaper El Universal, Disney would own nearly 30% of the programming in the market while companies like Warner Brothers and Universal owning substantially less content at 15.12% and 11.45%, respectively.

Stateside, the merger received conditional approval from the Department of Justice and Securities and Exchange Commission dependent of Disney's ability to sell the regional sports networks acquired in the merger. Disney had begun shopping all regional sports networks around, hoping to find one buyer to purchase all 22 networks, to no avail. Earlier this week, the New York Post had reported that Disney will likely be forced to break the networks into groups to make them more affordable for potential buyers.

As the Post points out, the regional sports network (RSN) business is on a rather sharp decline compared to the other businesses Disney acquired from Fox.

"The RSN business is not a growth business, but a declining business," one RSN expert told the Post. "There are a lot of subscriber defections [along with the rest of cable] and the RSNs do not own the digital rights."

As far as the hurdles in Mexico, it appears that an anticipated price increase is one part of the holdup. El Universal reports that television prices could increase upwards of 20% as a result of the merger — a pretty steady increase for cable packages anywhere across the world.

Previously, Disney CEO Bob Iger detailed how he'd handle the influx of personnel coming over from 21st Century Fox.

"Very good question," Iger said. "We're going to take the best people from both companies and that's who's gonna basically be on the playing field for us. Meaning, talent will prevail. Fox Searchlight is a great example. You look at FX, NatGeo."

"Yeah, you're buying libraries and brands, but you're also buying the people," he continued. "I'm not gonna talk about specific people right now except to say that I've met with virtually the entire senior management team at Fox and I'm not only fully engaged with them on what the possibilities for them might be but I'm excited about the prospects."

The Disney/Fox deal is expected to close on January 1, 2019.