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ACCC Clears Foxtel & Fox Sports Merger

The ACCC has announced it will not oppose the proposed merger of Foxtel and Fox Sports, determining that the transaction will not substantially lessen competition in the industry.

As part of the merger, Foxtel and Fox Sports will be brought together “under a common ownership”, with News Corp retaining 65% ownership of the entity. The merged organisation will also “enter a number of agreements with Telstra”.

At current, News Corp owns 100% of Fox Sports and owns Foxtel jointly with Telstra.

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ACCC Chairman, Rod Sims, states that it is unlikely that Fox Sports would be “made available to competitors of Foxtel” in the absence of the merger:

“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”

“Foxtel and Fox Sports have a close and long-standing relationship, operating within the ownership of 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”.

The regulator states it analysed how the proposed merger would affect various markets, and received feedback from several market participants:

“We focussed on the acquisition of sporting content and concluded that the proposed merger was unlikely to substantially lessen competition in this market”.

The ACCC also considered the merger’s effects – and related agreements – on the “supply of triple play bundles of voice, broadband, and audio visual content” from broadband and mobile providers.

As part of the merger, Telstra has been appointed the exclusive telecommunications agent for Foxtel’s digital products.

Sims affirms that an important consideration was whether consumers could access Foxtel’s digital services even if they utilised broadband from Telstra’s rivals:

“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”

“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”.

The ACCC commenced its review of the proposed Fox Sports and Foxtel merger on October 12th.

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