Kerry Stokes will have to wait until October before the competition regulator hands down its decision on his Seven Group’s potential acquisition of pay TV investor Consolidated Media.
However, based on a statement of issues published by the Australian Competition and Consumer Commission (ACCC) on Thursday, there appear to be significant hurdles for any deal to be approved.
The ACCC said if Seven acquired full control of ConsMedia it was likely to raise competition issues in the free-to-air (FTA) television market, particularly in relation to sports rights.
The watchdog called for parties with an interest in the potential acquisition to lodge their submissions by September 27, saying it expected to make a decision by October 11.
Although Seven has not made a bid, in June it asked the ACCC to look into regulatory concerns that could be sparked if it moved to increase its current 24 per cent stake in ConsMedia.
ConsMedia – majority owned by James Packer’s Consolidated Press Holdings – holds a 50 per cent stake in pay TV channel producer Fox Sports (FSA) and 25 per cent of Australia’s largest pay TV operator Foxtel.
Fat Prophets senior analyst Greg Fraser said the ACCC’s statement suggested it would be difficult for the watchdog to approve any potential takeover, given the concerns it had about Seven owning a large interest in both pay and free-to-air TV.
“The only real question that remains open is what will Seven do with their holding in Consolidated Media once the ACCC knocks it back,” Mr Fraser said.
The ACCC statement said owning 50 per cent and sitting on the board of Fox Sports would give Seven “significant influence” over the pay-tv channel and was likely to result in Fox Sports favouring Seven over rival free-to-air networks.
“The ACCC considers that the proposed acquisition has the potential to cause a substantial lessening of competition in the FTA market by limiting the ability of Seven Network’s rival FTA channels to effectively bid for premium sporting rights,” the ACCC said.
Moreover, Seven’s representation on the Fox Sports and Foxtel boards would give the company access to confidential information relating to sports rights bids being made by rival television networks, the ACCC said.
“This may provide Seven with a competitive advantage in negotiations with sporting bodies in acquiring such rights,” the statement said.
“We will continue working through the issues with ACCC in an effort to resolve their concerns,” Seven spokesperson Simon Francis said.
Last week, ConsMedia said it had accepted a revised takeover offer from News Ltd, the Australian arm of Rupert Murdoch’s global media empire News Corporation, of $3.45 a share.
ConsMedia shareholders would also receive a six-cents-per-share dividend as part of the deal.
News currently holds 25 per cent of Foxtel and the other 50 per cent of Fox Sports.
Seven Group closed five cents weaker at $7.65.
ConsMedia fell one cent to $3.41, while News Corp finished down 19 cents at $23.52.
