Australian Competition Authority Clears the Way for Ten Takeover

The Australian Competition & Consumer Commission (ACCC) has said that it will not oppose Birketu and Illyria’s proposed joint bid to acquire Ten Network Holdings.

Birketu, owned by Bruce Gordon, and Illyria, owned by Lachlan Murdoch, propose to each acquire a 50 percent interest in Ten and to operate it as a joint venture entity. Even though both Gordon and Murdoch have links with a number of media assets in Australia, the ACCC said that it does not have significant concerns about the potential for overlap between Gordon’s WIN interests and Ten, as the networks are broadcast in separate geographic areas.

“The ACCC considers that this deal is unlikely to result in a substantial lessening of competition in any relevant market, despite it lessening competition via a greater alignment of Mr. Murdoch’s, Mr. Gordon’s and Ten’s interests,” said ACCC Chairman Rod Sims.

“Our review focused on how the transaction would result in an expansion of Murdoch interests in Australian media, when they already have a significant influence in newspapers, Foxtel, radio and television production,” Sims added.

“We considered whether the acquisition would significantly reduce competition, by causing a reduction in the quality and range of news content, or increasing the negotiation power of the combined Ten/Foxtel/News Corporation.”

The ACCC considered feedback from a wide range of market participants, including broadcasters, sports rights holders, independent content producers and advertisers.

“On the issue of the effect on competition in the supply of news services, the ACCC took into consideration competition from news providers on other media platforms and in particular, the other free-to-air networks, given Seven and Nine have a stronger position in the market than Ten. Ten news, in particular, suffers the lowest news ratings of the three commercial networks and has a relatively small online presence,” Sims remarked.

“The ACCC also considered the effect on competition in the acquisition of sports rights and other types of content. The parties will continue to face competition from the remaining free-to-air networks as well as streaming services for the acquisition of content.”

In assessing the effect on the advertising market, the ACCC took into account that Ten and Foxtel are already commercially aligned through their MCN joint venture. MCN acts as an agent for both Foxtel and Ten to sell advertising.

“The ACCC is not oblivious to the fact that significant influence can be exerted through partial shareholdings and family connections; however, the ACCC did take into consideration that this is a proposed 50 percent acquisition by Illyria,” Sims said.

“Even though incentives to compete may be weakened if the proposed acquisition proceeds, Ten and Foxtel/News Corporation will remain competitors in a number of markets and will be subject to our competition laws which prevent them from making anticompetitive agreements.”

“While this transaction will result in some reduction in diversity across the Australian media landscape, we have concluded it would not substantially lessen competition, which is the test the ACCC is required to assess acquisitions against,” Sims continued.

“The Australian media market is becoming increasingly concentrated and we will continue to closely examine future media mergers in light of the impact any future loss of competition may have on both choice and quality of news and content produced for Australian audiences.”