- Initial decision on merger expected by end of July
- Phase two investigation would be more thorough
The UK competition watchdog has opened an investigation into the proposed broadcast joint venture between BT Sport and Warner Bros Discovery.
The deal will see BT Sport and Eurosport merged into a single entity that will own the rights to some of the UK market’s most valuable sports properties, as well as being able to challenge long-term incumbent Sky Sports.
The Competition and Markets Authority (CMA) has launched a ‘phase one’ investigation to determine whether the merger will have an adverse impact on competition or the public interest under the Companies Act 2002, submissions being invited to assist in its evaluation.
The regulator will decide whether to approve the deal or send it back for further “phase two” investigation by the end of July. It is understood that the CMA the interest came as no surprise to BT or Warner Bros Discovery given the high-profile nature of the deal.
“Our recent announcement with BT Group referenced that the transaction is subject to customary closing conditions, including approvals from relevant regulatory bodies. As such, this is a normal step in the process” , said a spokesperson for Warner Bros. Discovery. SportsPro.
There is also no indication that the partners will request that the investigation move quickly to phase two, which is common practice when the early stages of the investigation reveal that there is sufficient evidence that a deal will lessen competition. . Even then, a phase two investigation can still result in a no-recourse approval, as was the case with Virgin Media and O2 last year.
Under the terms of the agreement, the two partners will own a 50% stake in the combined entity, with the operating activities of BT Sport being transferred to Warner Bros Discovery, which will pay £93 million ($113.4 million dollars) now and up to £540 million ($658.8 million) if certain conditions are met.
Provided there are no unexpected setbacks, the merger is expected to be completed by the end of 2022, after which BT and Warner Bros Discovery will enter into distribution agreements with the joint venture to distribute the combined sports content through their respective platforms.