Watchdog throws Foxtel-Ten deal into doubt

Australia’s corporate regulator has thrown a spanner in the works of the proposed deal that would see pay TV market leader Foxtel buy a stake in free TV channel Network Ten.

The Australian Competition and Consumer Commission is concerned Foxtel and Ten would be able to enter joint bids for sports rights “to the exclusion of other free-to-air networks”.

The ACCC is concerned the agreement would leave News Corp- and Telstra-owned Foxtel and Ten in a dominant position. The regulator therefore wants more information on, “and importantly reaction to”, the issues raised.

“Such arrangements could enhance Ten’s ability to acquire the rights to sports, including premium sports, and could increase the likelihood of more sport being shown exclusively on Foxtel,” said ACCC chairman Rod Sims (pictured).

“Given the importance of sporting content to a broadcaster’s ability to compete strongly with other free-to-air networks, the ACCC is concerned that the advantage Ten would gain in acquiring sporting content may lead to a substantial lessening of competition in the free-to-air television market, or in the broader market for the supply of television viewing services.”

Foxtel had not made a statement in response at press time, though Ten submitted a filing to the Australian Stock Exchange noting it “firmly considers that the objective evidence establishes that the proposed transactions will increase competition in the relevant markets”.

In June, it emerged Foxtel would invest up to A$77 million (US$54.8 million) in Ten, which had desperately searching for investment after finances spiralled into the red.

At the same time, it was revealed Ten would become a 24.99% owner of Foxtel-backed ad sales firm Multi Channel Network. This company would also become Ten’s new ad sales representative.

Sims said the ACCC was “also concerned that the proposed acquisitions may reduce competition in the sale of advertising, including by further consolidation in this market, and by removing or reducing competition between Ten and Foxtel for advertising sales”.

Ten will also have the opportunity to take a 10% stake in Presto TV, the subscription on-demand service Foxtel operates with free TV market leader Seven Network.

The Australian Communications and Media Authority released a statement saying it continued to assess “whether the proposed arrangements between Foxtel and Ten are consistent with the media diversity and control rules prescribed in the Broadcasting Services Act 1992”.

A final decision is expected on Thursday, October 22.