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Foxtel may have to rethink their future after the consumer watchdog said that the acquisition of Austar by the pay TV Company would substantially reduce competition for pay TV, as well as the sale of broadband and future content delivered over an IP network.Recently Foxtel which is 50% owned by Telstra moved to shore up their dominance in the Australian market by bidding to buy 100% of the regional pay TV operator for $2.2 Billion.
Foxtel CEO KIM Williams who is trying to shore up his subscription TV monopoly in Australia via the acquisition of Austar is furious. He accused the ACCC of “extravagant technology romanticism”.
According to a Telstra executive Foxtel was attempting to shore up 25% of the Australian market for subscription TV with the Company holding onto the premium end of the market as Companies like Fetch TV in partnership with several ISP’s including Optus and iiNet expand their operation in Australia in competition with Telstra TV and Foxtel.
Fetch TV and Optus are tipped to be launching a $19.95 a month service that will deliver movies and TV shows similar to what Foxtel currently offer.
The Australian Competition & Consumer Commission delivered the fatal blow to the deal late last week when it released a statement of issues paper predicting “a substantial lessening of competition” for pay-TV services, TV content and several telecommunications markets.
The ACCC says the roll out of the National Broadband Network would open up opportunities for it to expand its geographic reach, and compete with Foxtel.
The competition watchdog notes that, as the two operators existing geographic areas become saturated and the growth in new subscriptions plateaus, there will be increasing financial incentives to compete in each other’s current zones.
The ACCC finds the proposed acquisition would prevent such competition from occurring.
“Foxtel and Austar are the only significant providers of subscription television services in Australia,” the ACCC notes in its statement of issues on the proposed acquisition.
“The proposed merger would therefore effectively create a near monopoly subscription television provider across Australia.”
The ACCC says free-to-air television networks are not sufficiently close competitors to subscription TV to constrain the actions of a combined Foxtel-Austar.
It is concerned that the merged entity would be more effectively able to outbid free-to-air networks and potential future pay TV rivals for exclusive content.
