ESPN, which is owned by Disney, expects to encounter regulatory hurdles as part of this deal, given that it will give Disney greater control over televised sports carriage and reduce competition. 

Critically, antitrust scrutiny would come from the Department of Justice, not the FCC, meaning Disney is beyond the long arm of the Carr on this one. But given the recent history of President Trump co-opting any division of the government to serve his whims, Disney may like to minimize any opportunity the DOJ might have for opposing the transaction. 

Similarly, Disney has a second deal in the works that might require federal approval. The company announced in January that it was acquiring a 70% stake in Fubo, which has similar hurdles as its ESPN deal with the NFL. Antitrust concerns have already arisen given how much control the merger would give Disney over the distribution of sports rights, especially given that it has a similar offering already in Hulu+ Live TV.

What does this mean for the future of Disney’s broadcast TV versus streaming? 

Virtually every element of this melodrama will hasten the move of audiences and attention from linear television to streaming.

Disney is stuck negotiating with Sinclair and Nexstar because its broadcast channel, ABC, offers it a key point of differentiation compared to other media companies, as well as a large viewership that helps it secure the rights to valuable packages, like sports broadcasts. Yes, broadcast audiences are the smallest they have ever been, but it is still better to have one than not.

Still, this headache has undoubtedly made Disney weigh just how valuable that broadcast audience is, according to media analyst Evan Shapiro. Streaming is beyond the purview of the FCC, meaning that content on Disney+, Hulu, and the ESPN app is subject to none of the oversight that its broadcast channel is. Were Disney to simply yank Kimmel from ABC and air his show on Hulu, these problems would disappear.

As the entertainment industry shifts slowly from linear to streaming, affiliate networks like Sinclair and Nexstar will have to account for these dwindling linear numbers, while Disney will focus on growing its streaming audience. In the future, the two parties might have little to do with one another.

But for now Disney’s linear business is still a sizable part of its operations, and continues to subsidize the growth of its streaming operation. Until that is no longer the case, Sinclair and Nexstar will have an outsize influence on its decisionmaking.