Mexico. The past 31 of January the plenary session of the Federal Commission of Economic Competition (COFECE) analyzed one of the most important acquisitions of media in recent years in Mexico that will have important implications for businesses that go from the transmission of sports to the cinematographic exhibition, It affects one of the key processes for the modern entertainment industry: the distribution of audiovisual content.
The Walt Disney Company, one of the largest media companies in the world, owns a vast worldwide portfolio of content ranging from the Star Wars universe to the family of sports channels ESPN, announced in December of 2017 its intention to acquire 21st Century Fox, a company that owns movie studios and dozens of television channels such as Fox Sports and National Geographic. This transaction, valued at 71,300 million dollars, was approved by the shareholders of both companies in July of last year.
The European Union, Brazil and the United States, among other jurisdictions, have reviewed this operation because it could create harmful effects on competition by uniting two large audiovisual content companies that frequently compete with each other. In the United States the Department of Justice imposed in June last year a series of conditions for the approval of this acquisition while the European Union gave the green light to the transaction in November also under the fulfillment of some conditions. In Brazil, the Conselho Administrativo de Defesa Econômica (CADE) began in July last year the review of the purchase and it is estimated that by March it could issue a decision on the matter.
It has transpired that the commissioners of COFECE determined that what they did to the markets that they had to analyze (movies, DVDs and marketing), they found no reason to worry about possible damages to the competition derived from this merger, for what they would have already given his approval.
We must now see what the full Federal Telecommunications Institute (IFT) will do, the authority that will study the most important or key issues for the telecommunications sector. In this case, we refer to the effects on competition in the audiovisual content distribution markets through different platforms, such as open television, restricted television or Internet television.
In this analysis, as did the authorities of other countries, the IFT is expected to study carefully the effects on the different segments of these markets, since it is known that in a particular way, there are well-founded concerns about the possible damage or risk to the competition in what corresponds to sports channels, where the resulting company would represent a high concentration.
This company would have the power to impose conditions on pay-TV systems, to the detriment of users -indeed those of the lowest economic packages- who currently have access to the content of sports channels with events of great interest, such as they are football matches of the local league and other international tournaments.
In the IDET we have the certainty that in the analysis that the IFT makes on the subject, in the same way that it has done in several decisions that it has adopted to strengthen the competition in the diverse markets of telecommunications of our country, it will have to put special attention on the effects on the most vulnerable users to the effects of a reduction in the possibilities of choice, in this case, of sports channels, as it has already done in Brazil, the Administrative Conselho de Defesa Econômica (CADE).
Analysis carried out by the Institute of Telecommunications Law, IDET.