Green light given to Foxtel and Fox Sports merger

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Australian Competition and Consumer Commission chairman Rod Sims speaks to the media during a press conference in Sydney, Monday, October 16, 2017. The ACCC today released a report into the National Electricity Market, which claims residential prices have increased by 63 per cent on top of inflation since 2007-08. (AAP Image/Dean Lewins) NO ARCHIVING

Australian Competition and Consumer Commission chairman Rod Sims speaks to the media during a press conference in Sydney, Monday, October 16, 2017. The ACCC today released a report into the National Electricity Market, which claims residential prices have increased by 63 per cent on top of inflation since 2007-08. (AAP Image/Dean Lewins) NO ARCHIVING

The merger of Fox Sports and Foxtel has been given a green light by the regulator, after its review found joining the companies together would not lessen competition.

Rupert Murdoch's News Corp owns 100 per cent of Fox Sports and is part owner of Foxtel in a joint arrangement with telecommunications company Telstra.

The new merger will bring the two companies together under common ownership, with News to hold 65 per cent and Telstra 35 per cent.

News and Telstra in August said the proposed merger would better position Foxtel-Fox Sports for a future sharemarket float.

Australian Competition and Consumer Commission chairman Rod Sims said it would not oppose the merger as Foxtel and Fox Sports had a "close and long-standing relationship" operating under News and Telstra.

"Given News' current interests in both Foxtel and Fox Sports, it would be unlikely that Fox Sports would be made available to competitors of Foxtel in the absence of the merger," Mr Sims said.

"The ACCC won't oppose this merger after finding that the commercial incentives of Foxtel, Fox Sports, News, and Telstra will not be substantially altered. Therefore, the change in ownership structure is unlikely to substantially lessen competition," he said.

Mr Sims said the ACCC had received a number of submissions about the merger from rival companies.

"We did get a small number of powerfully put submissions ... we had to liaise with these parties," he said.

This included "one or two major rival telcos and a rival of Foxtel".

Among concerns investigated by the regulator was whether the proposed merger would lessen competition in the acquisition of sporting content.

It also considered the effect of the merger and related agreements on the supply of triple-play bundles of voice, broadband and audio visual content by mobile and broadband providers.

"An important consideration was that consumers will still be able to access Foxtel's digital products even if they acquire broadband or mobile services from Telstra's competitors," Mr Sims said.

"Also, generally, where triple-play bundles are offered consumers still have to pay to acquire premium packages and there are alternative sources of content for other telecommunications suppliers wanting to offer triple play bundles."

Under a merger, Telstra would be the exclusive telecommunications agent for Foxtel's digital products.

A News Corp spokeswoman said it "welcome[s] the decision and will continue to work to finalise the transaction".

At the UBS 45th Annual Global Media and Communications Conference in New York on Tuesday, News Corp chief Robert Thomson said the company was still "in the midst of negotiations with Telstra" over the proposed merger.

He flagged News Corp's ability to use its mastheads nationally, using appropriate snippets of sporting content on these sites to enhance them and drive subscriptions in Australia.

While the deal was yet to be done, he pointed to more news in "coming weeks and months".

Foxtel said it was a matter for shareholders and so would not comment.

An announcement from Telstra to shareholders said it "welcomed the Australian Competition and Consumer Commission's decision to clear the combination of Foxtel and Fox Sports into a new company" but noted the transaction remained subject to the satisfaction of other conditions.

The two companies are working to finalise the transaction in the first half of 2018.

This story Green light given to Foxtel and Fox Sports merger first appeared on The Sydney Morning Herald.