On August 26, the Institute endorsed the merger between both companies to achieve the creation of their new streaming platform, however, the IFT warned of competition risks in the content market, because Warner Media, part of Discovery, has a substantial participation in the provision and licensing of children’s content for pay and broadcast TV providers and OTT, through channels of Cartoon Network and Cartoonito (formerly owned by Warner Media), as well as Discovery Kids (formerly owned by Discovery) .
In this regard, the IFT assured that the companies voluntarily submitted a proposal for conditions focused on remedying any risk to competition in that related market, including: attending to and negotiating all requests for access to Warner’s restricted channels made by any pay TV service operator; not tie or bundle Warner-owned restricted children’s channels with the Discovery Kids pay channel; and not to transfer audiovisual content from restricted children’s channels owned by Warner to the Discovery Kids channel or vice versa.
While on September 8, the Federal Economic Competition Commission (Cofece) fined AT&T and Warner Bros. Discovery 51,573,920 pesos for failing to notify a merger in terms of the Federal Economic Competition Law.
At that time, the antitrust entity argued that the international operation suggested that Discovery would acquire Warnermedia, part of the AT&T business, including the Mexican operation, as well as the purchase by AT&T shareholders of 71% of the company’s shares. resulting from the transaction, which would be renamed Warner Bros. Discovery.
But before Cofece issued its authorization, the companies separated only part of Warnermedia’s business in Mexico, which created, at least for a time, market structures and legal relationships that were not considered in the originally notified operation and that for this reason they could not be analyzed preventively by Cofece.
Days after the Cofece fine was issued, a source close to the process revealed to Expansion that the companies decided to face the fine to avoid delays in the asset merger process that will allow them to create a new streaming giant, which could be ready next summer 2023.