The proposed merger of the Brazilian arms of international sports broadcasters Fox Sports and ESPN has been given provisional approval by the Administrative Council for Economic Defence (Cade), the competition regulator in Brazil.
The two broadcasters will now fall under media giant Disney’s control which had been required to divest the Fox Sports channels in Brazil as part of its $71.3bn (€66bn) acquisition of 21st Century Fox.
The competition watchdog ruled that the merger presented a viable alternative to a divestment as there was no buyer to meet the necessary regulatory requirements, though it had conceded that Disney had made satisfactory attempts to carry out a sale.
Cade has issued a number of stipulations for the merger to progress. These include a commitment for Fox Sports to continue broadcasting events to which it holds the rights in Brazil, such as the Copa Libertadores, and that Fox Sports must continue as a linear channel on basic pay-television platforms until at least January 1, 2022.
Following the completion of the merger, ESPN will also be able to showcase sports properties to which Fox Sports holds the rights, raising the possibility of Copa Libertadores matches being shown across both.
After January 1, 2022 it is expected that the Fox Sports properties and broadcasts will be absorbed into the Brazilian arm of ESPN. At that time, Disney will inherit Fox Sports’ headquarters, rights and staff and will be able to sell the Fox Sports brand.
Disney will be required to relinquish control of the channel number Fox Sports sits on should it elect to end Fox Sports broadcasts prematurely.
Cade reporting adviser Luis Henrique Bertolino Braido said: “In the specific case, I think it is up to Cade to protect the diversity of sports programming available to the consumer. In my opinion, this would be a way of passing [the benefits] on to consumers and efficiency resulting from this concentration act.”
Brazil was not the only territory Disney was required to divest the Fox Sports brand with a similar process in Mexico having stalled in recent months.
Disney was handed a three-month extension to its divestment of equivalent channels in Mexico by the country’s competition authority (IFT) in early April.
The IFT conceded that with the global Covid-19 creating economic uncertainty, it would allow Disney extra time to find the Mexican branch a buyer.