Foxtel-Austar Merger Go Ahead DESPITE Monopoly Fears

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Controversial $2bn Foxtel-Austar deal gets go ahead today despite monopoly cries from rivals.

iiNet, who offer a FetchTV IPTV service, already expressed “serious” fears the $2bn merger between Foxtel and Austar will spell the death knell for IPTV and hand the enlarged Pay TV giant “entrenched market power” in TV and telcoms markets, in a submission to the ACCC last month.

In a submission to the competition watchdog, ACCC, iiNet regulatory chief Steve Dalby said he had “serious concerns” about the deal that will now give Foxtel 97% of the Pay TV market, as it will endanger competition in both TV and broadband  markets and the “entrenched and unreasonable market power in the hands of Foxtel and its majority shareholder, Telstra, will soon be applied to both subscription television and regional telecommunications,” he warned.

And telco iiNet will not the only ones sporting furrowed brows this morning after the competition watchdog approved the $2 billion deal allowing Foxtel to purchase regional player Austar today – Optus CEO Paul Sullivan already made similar soundings that the deal would “create a further barrier to competitive access to content”.

Players must “must-share content provisions,” he warned.

But Scott Lorson, CEO of Fetch TV, which supplies content to the likes of Optus and iiNet,says the conditions associated with the approval of the Foxtel deal now allows Fetch TV to bid for content from the likes of Disney, BBC, the Movie Channel, Turner, Nickelodeon and several other major Hollywood Studios, currently subject to exclusive content deals.

Read: Fetch TV The Big Winner Out Of Foxtel Merger

 

Indeed, the Foxtel $2bn merger with regional player Austar is not without preconditions as set down by the competition watchdog, today, which Foxtel has now agreed upon, paving the way for the acquisition.

The deal preconditions prevents Foxtel from acquiring exclusive rights to Nickelodeon and National Geographic channels as well as “companion mobile rights” to other IPTV content covered by the undertaking, the Australia Consumer and Competition Commission confirmed. 

The undertaking does not prevent Foxtel from acquiring exclusive rights in relation to individual sports, however.The ACCC says competition concerns surrounding Foxtel’s ownership of exclusive sports rights, exists independently of the Austar acquisition.

“The proposed undertaking has been offered by Foxtel  to address the harm to competition which is likely to arise as a result of the proposed acquisition,” ACC Chairman Mr Rod Sims said.

“However it is not intended to resolve competition or structural issues that may already exist in the relevant markets and are unrelated to the proposed acquisition.”

Sims also said the ACCC “remains alive to competition concerns in existing and emerging media markets” and “will continue to consider these issues…. including consideration of whether exclusive content arrangements have the purpose or effect of substantially lessening competition or involve a misuse of market power.” 

“The ACCC will also continue to consider whether there is a need to advocate for regulatory intervention in these markets”, he warned. 

Telstra, which owns a 50% stake in Foxtel, said it welcomes today’s decision for the Pay TV giant to buy regional player Austar.

And its not just Foxtel owners News Limited, Telstra and Consolidated Media Holdings that should be jumping for joy – its also a “win win ” for T Box and Austar users ability to access new content, says Telstra Digital Media boss.

“The merger … will create a pay TV company that will be able to provide innovative content for customers across Australia,” Rick Ellis, Group MD Telstra Digital Media said today.

 

The deal will 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 said it 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.

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