Foxtel considers ACCC legal action

Australian pay-TV operator Foxtel will consider taking legal action against the Australian Competition and Consumer Commission (ACCC) if it is unsuccessful in overturning the regulator’s preliminary view that its A$1.9 billion acquisition of regional pay-TV group Austar is anti-competitive (see ‘Regulator raises Foxtel Austar bid concerns’, July 22).

Foxtel chief executive Kim Williams contends that the Statement of Issues paper released by the commission on Friday was short on fact and full of “bald assertions”. The ACCC’s preliminary view was that a merger would substantially lessen competition in pay-TV, the market for buying programmes and for the supply of telecommunications products because it is half owned by Telstra.

“What we have in the commission’s Statement of Issue is a recital of opinions which do not have recourse to any kind of evidence,” argued Williams. “Parts of the commission are entitled to have their own personal opinions, but fortunately our legal system doesn’t operate that way.”

Analysts had expected the regulator to allow the deal because Foxtel and Austar do not compete for content or advertising and only compete for customers on the Gold Coast. Instead, it suggested that Foxtel and Austar would end up using high-speed broadband to move into each other’s markets if the deal were blocked. The regulator is concerned a combined Foxtel/Austar will lock up pay-TV and online sports rights to the detriment of owners such as the AFL or NRL.

According to Williams, it did not make economic sense for Austar and Foxtel to enter each other’s markets accusing the ACCC of “extravagant technology romanticism,” as well as suggesting that the content argument was invalid because Foxtel made its services available to other broadband and pay-TV operators such as Optus.

“The fact is if we were a merged entity now we would not pay one dollar more for the AFL than we have already paid. I cannot say that sufficiently strongly. What is being asserted is wholly factually wrong,” Williams said, pointing out that Foxtel had a number of pay-TV arrangements in place with Optus, and had offered it a full Internet-TV service offering, which was rejected.

 

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