Foxtel-Ten deal gets regulatory approval

Foxtel’s agreement to buy into Australian free TV channel Ten Network is going ahead after local competition authorities opted against opposing the deal.

The Australian Competition and Consumer Commission and the Australian Communications and Media Authority have now given their approval to the deal after investigating specific concerns.

The proposed agreement will see Australian pay TV firm Foxtel take a 15% stake in Ten and invest A$77 million (US$55.6 million), with Ten at the same time becoming a 24.99% owner of Foxtel-backed ad sales company Multi Channel 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,” said ACCC chairman Rod Sims.

Approval has also been given for Ten to become a 10% shareholder in SVOD platform Presto, which Foxtel currently runs with Seven Network, should it wish to do so.

The ACCC had been concerned a merged Foxtel-Ten could take a dominant position in the crucial sports rights market, but has now ruled this is no longer an issue.

“The ACCC considers the other free-to-air television networks, pay television providers and on-line service providers will continue to have sufficient alternatives to allow them to obtain content that is attractive to their viewers,” said Sims.

“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 ACMA, meanwhile, has decided the proposed transaction would not breach the so-called ‘two of three rule’, which does not allow local media firms to own a commercial TV licence, a commercial radio licence and an associated newspaper.

“The principal issue considered by the ACMA was whether the arrangements would put [Ten shareholder and News Corp affiliate] Mr Lachlan Murdoch [pictured] in a position to exercise control of commercial television broadcasting licences held by Ten,” said ACMA chairman, Chris Chapman.

“If so, an ‘unacceptable three-way control situation’ would result in the four licence areas where Mr Murdoch is already in a position to control the Nova commercial radio broadcasting licences and the News Corporation associated newspapers.

“However, the ACMA considered that, while Mr Murdoch was in a position to exert influence on Ten, that level of influence fell short of ‘control’ as prescribed by the [Broadcasting Services Act 1992].”

A statement from Ten welcomed the decisions, again stating the investment would allow the channel, which has struggled financially in recent years, to reduce debt and provide more financial flexibility.

“We are very pleased to receive clearance from the ACCC and the ACMA for the proposed transactions,” said Ten’s non-executive chairman, David Gordon. “The approval from the ACCC and the ACMA represents another important step for Ten to conclude the strategic review process initiated by the board last year.”

“By entering into the transaction with Foxtel and completing our proposed entitlement offer to all Ten shareholders, Ten will receive the capital it needs to continue its turnaround.”

In order for the deal to officially close, certain regulatory conditions and approval still need meeting, but consent from Australia’s competition authorities was considered the key issue and is now closed.