The competition watchdog has given the green light to Foxtel’s $2 billion takeover of Austar, but slapped strict controls on the suitor to help protect emerging internet TV services.
As part of court-enforceable undertakings, Foxtel was prevented from buying exclusive internet protocol television (IPTV) rights to 62 channels, including ESPN, Sky News Australia, Disney Channel, Nickelodeon.
Foxtel was also banned from acquiring exclusive video on demand content and exclusive mobile rights to TV shows and movies where the rights are sought by its competitors to combine with IPTV rights.
The undertakings last for eight years, the ACCC said.
“You really have to make content available to the local players,” Australian Competition and Consumer Commission (ACCC) chairman Rod Sims told Sky News Business on Tuesday.
“Foxtel/Austar without this undertaking would have had the muscle to lock most of it up on an exclusive basis and actually we saw that they were doing that.
“This was a very important undertaking and it does have important implications for the future market.”
The undertakings do not preclude Foxtel from buying exclusive rights to individual sports.
The ACCC said that to the extent Foxtel and its shareholders’ ownership of exclusive sports rights may raise competition concerns, these concerns existed independently of the proposed acquisition.
The chief executive of internet television Fetch TV Scott Lorson said the undertakings would lead to more content being available to more people at lower prices.
“The undertakings will allow Fetch TV to offer consumers a expanded choice of premium content and at a far more attractive price point,” Mr Lorson said.
“In light of the regulatory framework and associated limitations, we feel that today’s outcome is a very sensible and pragmatic one.
“Remaining structural issues will require a different tool set, but this is a positive step in the right direction.”
Fetch TV provides IPTV services to internet service providers including Optus and iinet.
Foxtel is half-owned by Telstra Corporation, with James Packer’s Consolidated Media Holdings and Rupert Murdoch’s News Corporation each holding a 25 per cent stake.
Optus said the changes did not go far enough to address the significant control the combined Telstra/Foxtel group was likely to have on access to premium content.
“This is important to ensure Australians are not locked into paying prohibitive prices for premium content,” an Optus spokesperson said in an emailed statement.
Austar closed up four cents at $1.52.
Telstra was steady at $3.36, while Consolidated Media was steady at $3.05.
News Corporation closed down 33 cents at $18.77, while News Corp’s non-voting scrip fell 44 cents to $18.38.
Austar shareholders voted in favour of the proposed takeover on March 30.
The parties head to the Federal Court on April 13 for final approval and the deal is expected to be completed by late May.
