Foxtel, Austar $2bn merger goes ahead

The Australian competition watchdog has okayed Foxtel’s A$2bn (US$2.1bn) move to acquire rival pay-TV platform Austar.

The development puts to an end speculation the Australian Competition and Consumer Commission (ACCC) would veto the deal on anti-competition grounds.

Under terms of the greenlight, pay-TV market leader Foxtel has agreed to relinquish exclusive IPTV rights on TV and movies, spanning its 60-strong independent linear channels bouquet and subscription VoD rights for current and past TV series from independent providers.

Significantly, this caveat extends to arrangements with premium channels such as Nickelodeon and National Geographic.

On the feature film side, the deal blocks Foxtel from gaining exclusivity of movie content from more than half of the major US studios and eight independents. It also blocks some SVoD rights.

Furthermore, Foxtel will not be able to acquire a movie on an exclusive transactional VoD basis, and significantly stops the paycaster from taking exclusive mobile rights attached to IPTV deals.

The ACCC hopes these measures will end fears the deal will give Foxtel’s joint-parent Telstra the opportunity to offer Austar’s mainly regional telephony and broadband customer base sweetened triple-play deals and impair competition.

It also said it hoped the merger would positively impact the country’s developing telecommunications networks and “create opportunities for new and existing competitors to develop differentiated more affordable television offerings” for customers.

“By reducing content exclusivity, the undertakings will lower barriers to entry and promote new and effective competition in metropolitan and regional telecommunications and subscription television markets,” said ACCC chairman Rod Sims.

“Taking into account the undertaking which has been offered by Foxtel, the ACCC is satisfied that the proposed acquisition is unlikely to substantially lessen competition,” he added.

Telecoms firm Telstra owns 50% of Foxtel, with News Corp and Consolidated Media Holdings taking two other 25% stakes each. On completion of the deal, Austar’s 54% majority owner, Liberty Global, will exit.

A Public Competition Assessment on the merger will now follow.

The ruling is a welcome boost for News Corp’s Australian business, which is under fire after Fairfax Media’s Australian Financial Review (AFR) published allegations last month claiming that News Corp part-owned pay-TV encryption specialist NDS facilitated piracy against its rivals in the 1990s. News Corp has strenuously denied the claims and alleged that rival Fairfax was seeking to damage its local newspaper, The Australian.