Legal professionals and industry insiders indicate that the NFL’s new agreement with Walt Disney, which involves ESPN acquiring certain shares in exchange for Prime Media assets, is likely to draw attention from the U.S. Department of Justice.
This deal, revealed on Tuesday, means ESPN would take over NFL networks alongside other media properties while securing a 10% share in the sports network.
Andre P. Barlow, a partner at Doyle, Barlow & Mazard, commented that the deal, “certainly raises competitive concerns.” He further noted, “This deal could lead to increased costs for consumers as Disney’s dominance in sports media might restrict choices and elevate prices for streaming services and gaming access.”
According to an anonymous source familiar with the situation, the Department of Justice is set to perform a thorough assessment of the ESPN-NFL transaction. Another source suggested it might take nearly a year to clear the antitrust review.
Both ESPN and the NFL have chosen not to comment on this matter.
The anticipated review aligns with the Department of Justice’s heightened scrutiny on sports streaming service Fubo TV, as they assess another earlier Disney deal. Back in March, the department requested additional information, aiming to determine whether market transactions were overly monopolized.
Meanwhile, the rising costs for fans, particularly as games transition to streaming platforms, became a topic of discussion in the Senate, where the Commerce Committee held a hearing earlier this year.
Texas Republican Senator Ted Cruz remarked, “In today’s deeply divided country, sports may stand as our most significant cultural unifier. Yet, millions of fans are simply asking: ‘Why do they seem to cost more and be harder to watch?'”
John Bergmeyer, leading legal affairs at the non-profit Public Knowledge, echoed this concern. He stated, “With the rapid rise of streaming services and the consequent fragmentation of content, the expenses associated with watching streaming videos are climbing, making many pay comparable amounts to their previous cable bills.” He added that some viewers feel they have merely exchanged one bundle for another.
ESPN Streaming Service
As part of their deal, the NFL has contacted over 30 council offices to discuss the agreement’s impact on consumer choices.
This arrangement will allow ESPN to integrate NFL networks into a broad array of sports programming and include them in the ESPN-branded streaming service. Additionally, ESPN plans to merge its fantasy football services with those of the NFL.
ESPN will also be able to distribute NFL RedZone through cable and satellite providers, while the NFL retains online streaming rights via YouTube TV.
Disney previously won approval during President Trump’s term for a $71 billion acquisition of 21st Century Fox’s assets in 2018 but was required to divest Fox’s 22 regional sports networks to mitigate competitive issues. At that moment, Trump supported Rupert Murdoch regarding the deal.
Barlow remarked, “That was wrapped up rather quickly.” However, he anticipates that this time, the Department of Justice will “scrutinize closely before giving the green light.”
The recent media merger involving $8.4 billion between Paramount Global and Skydance Media is currently stalled due to prolonged regulatory reviews, further complicated by a lawsuit from Trump against Paramount.
FCC Chair Brendan Kerr asserted that the legal issues and regulatory assessments are unrelated, although the commission approved the earlier transaction shortly after Trump received a $16 million settlement.
Political factors can make things tricky. Some insiders within the sports industry have pointed out Trump’s threats regarding a new football stadium in D.C. unless a local NFL team, now known as the Commanders, returned to its former name after facing backlash for its racial implications.
Currently, ESPN is 80% owned by ABC Inc., a subsidiary of Disney, with Hearst holding the remaining 20%. If the deal goes through, ABC’s stake will drop to 72%, while Hearst’s will fall to 18% to allow for the NFL’s 10% share.
