ACCC Clears Foxtel & Ten Tie-Up

SYDNEY/MELBOURNE: The Australian Competition and Consumer Commission (ACCC) has cleared the way for Foxtel to purchase up to 15 percent of Network Ten.

The ACCC also does not oppose Ten’s proposal to acquire a 24.99 percent stake in Foxtel’s advertising agency Multi-Channel Network (MCN), and Ten’s option to acquire 10 percent of Presto (a joint venture between Foxtel and Seven Network).

“While the acquisitions will lead to a greater alignment of Foxtel’s and Ten’s interests, and will increase the degree of influence Foxtel has over Ten, the ACCC considers that the proposed acquisitions, on their own, are unlikely to result in a substantial lessening of competition,” ACCC Chairman Rod Sims said.

“The ACCC has not found sufficient evidence to establish a link between these minority acquisitions and the competition concerns raised by market participants. We will, however, closely examine any future increases in these shareholdings, including where this is made possible through changes to the existing media diversity and control rules.”

In reaching its decision, the ACCC investigated whether the acquisitions would substantially reduce competition in the acquisition of sports rights and other types of content, with related effects in the free-to-air and broader television viewing markets.

“The ACCC considers the other free-to-air television networks, pay television providers and online service providers will continue to have sufficient alternatives to allow them to obtain content that is attractive to their viewers,” Sims said. “Foxtel and Ten will continue to face competition from the remaining free-to-air networks, and streaming services are also likely to become increasingly important to the sale of sports rights.”

“The ACCC took into account the anti-siphoning regime and considered that it reduced competition concerns with this transaction. With a near monopoly pay-TV provider in Foxtel, the anti-siphoning regime could well currently have a positive effect on competition in the market for television viewing,” Sims continued.

In regard to premium non-sport content, the ACCC determined that there are a large number of content producers competing to sell compelling content. In-house production by the major free-to-air television networks also plays an important role in the market. With respect of advertising, the ACCC concluded that the MCN acquisition is likely to increase the incentives for Ten and Foxtel to offer bundled advertising packages across their platforms, and to integrate their advertising strategies, but that the acquisition itself will not lead to a substantial lessening of competition.

The ACCC has not, however, provided clearance for Ten’s agreement with MCN in relation to managing Ten’s advertising sales, which is not subject to the merger provisions of the Competition and Consumer Act 2010.

“More broadly, any future regulatory reform should promote greater competition in the media industry. Existing regulations may no longer be effective, and may have unintended competition effects, as a result of technological developments that are reshaping the industry,” Sims said.

“For example, the ‘reach rule’ continues to limit a person from controlling television broadcasting licenses that reach over 75 percent of the population even while commercial free-to-air television networks are now able to stream their services nationally.”

The proposed transaction still remains subject to certain conditions and other regulatory approvals, including from the Foreign Investment Review Board.