News Corp.'s Australian Pay TV Firm Foxtel Gets Regulatory Approval for Austar Acquisition
The company promised to stick to court-enforceable conditions in the deal with its competitor that is 54 percent-owned by John Malone's Liberty Global.
LONDON - The Australian Competition and Consumer Commission has decided not to oppose the $2 billion acquisition of Austar United Communications by News Corp.'s Foxtel, accepting court-enforceable conditions, or undertakings, proposed by the buyer in the planned combination of pay TV giants.
"The undertakings will prevent Foxtel from acquiring exclusive Internet protocol television (IPTV) rights for a range of attractive television program and movie content," among other things, the regulator highlighted.
John Malone's Liberty Global controls 54 percent of Austar. Foxtel is 50 percent owned by Australian telecom giant Telstra. Rupert Murdoch's News Corp. owns a 25 percent stake as does Consolidated Media Holdings, but News Corp. has management control over the company.
“The proposed acquisition would bring together the two main subscription TV industry players in Australia each with a substantial customer base and significant access to key content," ACCC chairman Rod Sims said in explaining the importance of the restrictions. "This would in turn give Telstra, Foxtel's largest shareholder, greater market power in regional fixed broadband and telephony markets."
Added 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.”
In a statement, Austar welcomed the regulator's decision to allow the combination. In July, Austar had announced an agreement with Liberty Global and Foxtel.
"The ACCC’s announcement today is another significant milestone in the course of a transaction that Austar maintains is in the best interests of shareholders and consumers," the firm said. A final court hearing on the deal is scheduled for Friday.
If the deal gets court approval, Austar will delist from the Australian Stock Exchange on April 27, with Foxtel closing its acquisition in late May, it added.
Among the IPTV rights that Foxtel will be blocked from acquiring exclusively are linear channels supplied by independent content suppliers, subscription VOD rights to current or past seasons of TV programs "that form part of a linear channel supplied by an independent content supplier" and linear movie channels, or movies for inclusion in a linear channel, from more than 50 percent of the eight major movie studios or more than 50 percent of eight specified independent studios. Content that must stay non-exclusive under the arrangement are also such networks as Nickelodeon and National Geographic, one analyst highlihted.
The undertakings, which will be in effect for eight years, also prevent Foxtel from acquiring exclusive mobile rights to this content where those rights are sought by competitors to combine with IPTV rights.
“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 Sims.
Barclays Capital analyst James Ratcliffe lauded the deal as bringing benefits for Liberty Global. "We believe approval of the deal is a positive for Liberty Global shareholders as Liberty Global is expected to receive about $1 billion once the transaction is complete," he said in a note to investors. "The divesture also lets LG concentrate on its European operations; outside of Chile and Puerto Rico, LG is now entirely focused on Europe."
- MOST SHARED
- MOST POPULAR