The Australian Competition and Consumer Commission has cleared Foxtel’s proposed purchase of a 14.9% stake in Network Ten Holdings and Ten’s 24.99 per cent stake in Foxtel’s advertising agency Multi-Channel Network (MCN).
The regulator also approved Ten’s two-year option to acquire 10 per cent of Presto TV, the streaming joint venture between Foxtel and Seven West Media.
While the ACCC did not clear Ten’s agreement to have MCN handle the broadcaster’s advertising sales, which started on September 1, it noted that arrangement is not subject to the merger provisions of the Competition and Consumer Act 2010.
Concurrently, the Australian Communications and Media Authority confirmed it is satisfied, at this time, that the proposed arrangements will not contravene the media diversity and control rules in the Broadcasting Services Act 1992 (the BSA).
ACMA chairman Chris Chapman said, "The principal issue considered by the ACMA was whether the arrangements would put Mr Lachlan Murdoch in a position to exercise control of commercial television broadcasting licences held by Ten.
"‘If so, an 'unacceptable 3-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 BSA."
Network Ten said it will now be able to embark on a capital raising ($77 million in new shares to Foxtel, the same amount to existing shareholders) to reduce debt and continue its ratings turnaround.
Non-executive chairman David Gordon said: “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. Through the arrangements with MCN, our advertising clients will receive the benefit of new efficiencies, improved data capability and broader integration opportunities.”
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.”
The ACCC investigated whether the acquisitions would substantially reduce competition in the acquisition of sports rights and other types of content.
It found 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.
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.”
Welcoming the announcement, Foxtel CEO Richard Freudenstein said, “These transactions will provide much needed capital for Ten and help it to grow revenues by building scale and enhancing services to clients by working with MCN.
"A stronger Ten will further enhance competition in an increasingly competitive local and international media industry."
The proposed transactions remain subject to certain conditions and regulatory approvals including by the Foreign Investment Review Board.
Sims added that any future regulatory reform should promote greater competition in the media industry. He suggested existing regulations may no longer be effective as technological developments reshape the industry, citing the rule which limits any broadcaster from reaching more than 75 per cent of the population while networks can now stream their services nationally.