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Now, a far more consequential topic on Disney’s legal agenda…

There may be a new unintended consequence of the federal government shutdown: In addition to furloughed employees, lapsed nutritional aid, and interruptions to the Smithsonian’s Giant Panda Cam, The Walt Disney Company may soon be free to close its acquisition of FuboTV. You’ll recall that the deal has been on pause since April, when the Department of Justice opened an inquiry into Disney’s surprise decision, back in January, to buy a controlling stake in the streamer. The D.O.J.’s move was understandable, as I reported at the time, because the arrangement effectively ended a major antitrust fight that Disney had been losing.

Why was Disney interested in FuboTV in the first place? You surely remember Venu (a.k.a. “Spulu”), the proposed sports streaming joint venture between Disney, Warner Bros. Discovery, and Fox Corp. That three-headed beast pretty much collapsed, in August 2024, after Fubo convinced a federal judge that the venture threatened its own existence as a sports-oriented distributor and should be blocked as anticompetitive. Rather than wage a grinding appeal to overturn that preliminary injunction, Disney plonked down $220 million for a 70 percent stake in the company. Naturally, the feds had questions.

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Like all major transactions, the deal was submitted for antitrust review under the Hart–Scott–Rodino Act. But unlike most deals, it didn’t sail through after the 30-day waiting period. Instead, the D.O.J. issued a rare “second request” for documents, placing the deal in a bucket of transactions subject to deeper scrutiny. Legally, Disney couldn’t close until after “substantial compliance” with that request. That wasn’t enough time, so the two sides entered a voluntary timing agreement—effectively pressing pause on the closing.

That pause, I’m told, is about to expire. (A Fubo spokesperson declined to comment.) Under normal circumstances, the D.O.J. might seek another extension. But thanks to the standoff on Capitol Hill, many Antitrust Division staffers have been furloughed, meaning deadlines could lapse with regulators quite literally out of office. In short, Disney’s Bob Iger could get lucky. And not just with Fubo. Disney’s other pending acquisition—of the NFL’s media assets—also sits before the D.O.J. That transaction would further cement ESPN’s grip on the sports broadcasting market. There’s been some idle chatter that the Trump administration might try to meddle with the review as payback for the league’s choice of Bad Bunny as the Super Bowl halftime performer. (Never mind that this season’s championship airs on NBC…) But government intervention requires government workers, and right now, many of them are home, perhaps watching the new ESPN streaming service, if not live pandas.

As the Disney–FuboTV deal choreography has demonstrated, companies often cooperate with federal regulators by voluntarily holding off on closing their mergers. After all, few want to risk the alternative of the government rushing into court seeking an injunction. But what happens when there’s no realistic path to clearance—say, because the president doesn’t like the cut of your jib, and a court case is inevitable anyway?

I’ve been thinking about this all week as conventional wisdom has begun to harden around the notion that only a Trump-preferred player—namely, the Ellison clan—could get a Warner Bros. Discovery deal past regulators. The assumption, repeated most loudly by Charles Gasparino at the New York Post, is that a rival bidder like Comcast and its co-C.E.O. Brian Roberts would never overcome Trump’s ire. Yes, if Paramount Skydance has a golden ticket to speed through the merger-review process, it would certainly be an advantage, but it’s a mistake to treat this WBD deal as subject to a presidential veto. Trump’s merger cops simply don’t have that kind of leverage. This isn’t like Ellison’s deal to acquire Paramount, which required the approval of Brendan Carr’s Federal Communications Commission. In the WBD deal, which wouldn’t involve a broadcast network, the feds could still slow things down and make life miserable for a few quarters. To stop a deal outright, however, they’d have to convince a judge that the merger violated antitrust law. That’s a much heavier lift than social media—or Gasparino—would have you believe. Cognizant of these dynamics, an interested bidder like Comcast has several strategic levers at its disposal. For one, Roberts & Co. could offer deal certainty to David Zaslav and the WBD board in the form of a “hell-or-high-water” covenant obligating the company to take all necessary steps to secure regulatory approval, paired with a hefty reverse termination fee if the transaction collapsed over antitrust failure. Comcast could also preempt enforcement by anticipating any regulatory concerns and proposing a remedies package, such as divesting CNN, promising not to tilt the playing field toward WBD content, or maybe even dusting off some NBCU-era behavioral commitments, such as offering local news and children’s programming. (Comcast recently donated to Trump’s ballroom/East Wing demo project, which may also help its standing with the White House.) Of course, none of that would guarantee smooth sailing with Trump’s D.O.J., which has been busy drawing up indictments for the president’s perceived foes. A merger challenge could still follow. But in that scenario, Comcast could argue selective enforcement, or even the First Amendment, as part of its defense. During Trump’s first go-round in the Oval Office, the D.O.J. tried to block AT&T’s acquisition of Time Warner—nominally over the bargaining friction caused by DirecTV’s parent owning Turner content. At the time, many observers noted that Trump’s longstanding loathing for CNN may have had something to do with the arrival of the regulators. The merging parties offered concessions. They invoked the president’s distaste. They teed up constitutional questions. In the end, what mattered was Judge Richard Leon’s conclusion that the D.O.J.’s theory of harm didn’t hold water. The deal closed. Could the government return this time with a different theory? Certainly. Perhaps they pivot to labor market effects, arguing that two major studios under one roof would depress wages—a crowd-pleaser for the already fretting guilds, and a handy wedge issue in the cultural cold war. But it would still require economic rigor, a market definition that acknowledges streaming, and an argument that doesn’t crumble in the face of A.I. and ever-shifting consumption patterns. (Also worth noting: Comcast and PSKY deals would both place two major studios under one roof.) With that said, I’d still bet on PSKY. Not because the law favors them, but because they’ve shown up with a real appetite for all of WBD’s assets. That matters, although as my partner Bill Cohan deftly laid out, they may need to step up the bid price to compete with the perception by Zaz and many on Wall Street that a split before sale would yield greater value. As for the other suitors, there seems to be genuine interest, although none is pressing aggressively thus far—and those cable TV assets may be a nonstarter for every other potential suitor. Comcast, for instance, is already spinning out its own. But if these companies do decide to throw their hat in the ring, they probably won’t be scared off by Washington, nor should they be. It could get a bit messy, but the industry shouldn’t treat a Trump veto as inevitable—or make it a self-fulfilling prophecy.

Thanks, Eriq. I’ll see everyone on Thursday.

Matt

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