Massive New Foxtel Monopoly Approved By ACCC

Foxtel is free to take over regional rival Austar United Communications, creating a massive pay subscription monopoly.The $2 billion deal is subject to court-enforceable undertakings from Foxtel.

The undertakings prevent Foxtel from buying exclusive internet protocol television (IPTV) rights for a range of TV shows and movies.

Foxtel also is banned from exclusively buying any movies delivered on a transactional video-on-demand basis.

The pay TV giant also is prevented from buying exclusive mobile rights to TV shows and movies where the rights are sought by its competitors to combine with IPTV rights.

Last hurdle

In a statement issued following the ACCC announcement, Austar said that it will not oppose the proposed acquisition of the company’s assets.

Telstra who own 50% of Foxtel said the ACCC’s clearance of this merger was the last material outstanding condition precedent to the completion of the agreement between Foxtel and Austar.

Federal Court approval for the Austar shareholder vote is now required for the merger to be finalised.

Rick Ellis, Group Managing Director Telstra Digital Media, said this decision was a win for consumers:

“The merger between Foxtel and Austar ill create a pay TV company that will be able to provide innovative content for customers across Australia.”

“It will also enable Telstra to expand its Foxtel on T-Box offering into some Austar areas over time, enabling regional Australians in those areas to enjoy the same high quality IPTV services as those who live in metropolitan areas.

“Telstra will provide further detail on its plans to expand the availability of Foxtel on T-Box at a later date.”

Telstra’s contribution to this transaction will be in the form of a subordinated shareholder note. The provision of this loan is excluded from Telstra’s cashflow for guidance purposes.

Austar shareholders last month voted to approve the deal and the ACCC nod was the last hurdle for the deal.

Australia’s competition watchdog was worried that the merger would destroy pay-TV competition by merging the two main providers, Austar and Foxtel, which is owned by Telstra, Rupert Murdoch’s News Corp and James Packer’s Consolidated Media Holdings.

“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,” ACCC chairman Rod Sims said in a statement.

“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.”