The Administrative Council for Economic Defense ( Where is it) approved a new agreement with Disney to mitigate the concentration effects resulting from the purchase of Fox by the group. The establishment of new commitments was necessary because it was not possible to conclude the sale of Fox Sports by the group, a condition established in the first agreement, signed in February last year. The change will make ESPN, among other things, able to broadcast the Copa Libertadores matches.
According to Cade, Disney should maintain the distribution of 40 sporting events on linear channels for three years or until the expiration of the contracts. Between the date of signing the agreement and January 1, 2022, Disney will have to make efforts to ensure that Fox Sports remains attractive. At least the main channel must be maintained and the brand must be used consistently, without prejudice to transmission through other channels.
According to the agreement, as of January 1, 2022, these events must be broadcast by some other channel, such as ESPN Brasil and ESPN – the main one is the Copa Libertadores. If you choose to close the Fox Sports channel in 2022, Disney must commit to returning the brand in advance, so that it is free for use by any other agent that is interested.
“The brands are not being acquired in this merger. Disney may use them for some period, but the brands will be returned to their owner,” said councilor Luis Henrique Braido.
In February last year, Cade approved the purchase of Fox by Disney, but conditioned the operation to the sale of Fox Sports by the group. According to the regulator, 34 groups showed interest in the channel, of which 10 fulfilled requirements and were qualified, but only three presented non-binding offers. None of them, however, contained an asset restructuring plan, a condition deemed necessary by Cade, since the Fox Sports channel demanded immediate investments, made losses and did not support itself.
“There is no way to run the company in the short term without investment. The challenges are enormous, especially in the midst of the new coronavirus pandemic,” said Braido. “All sports broadcasts interrupted worldwide. Fox Sports, in particular, is impacted by the currency devaluation, as its events are international, signed in dollars and euros, and its advertising and subscription revenues are in reais. most dramatic situation “.
The advisor’s vote was approved by a majority of all. Only counselor Lenisa Rodrigues Prado voted to postpone the trial. For her, the ideal would be to judge the process at a later date, to allow negotiations with other interested parties. She argued that the Copa Libertadores is suspended and that the broadcasting of sporting events will undergo significant changes after the end of the social isolation measures, adopted due to the pandemic.
Cade also approved the opening of an investigation to investigate the anti-competitive effects resulting from the purchase of Fox by Disney. This process, according to Braido, intends to investigate irregular practices of contracts signed between producers and operators and how non-isonomic treatment between companies can affect the final consumer. The counting will not be restricted to Disney and will affect all market producers, said the adviser.
Among the questions that must be answered in the process are: which producers charge different prices; whether the cost and revenue structure generates economic efficiency for this practice; whether this distorts competition between operators of different sizes or limits the entry of new companies into the market; whether distortions have an impact on the pay-TV consumer. “I insist that price discrimination without economic justification derives from the market’s dominant position,” said Braido.