ACCC approves Foxtel / Austar merger

The long-awaited merger of Pay TV providers gets the green light, following a series of undertakings from Foxtel.

The Australian Competition and Consumer Commission has approved Foxtel’s takeover of regional Pay TV provider Austar.

The long-awaited outcome follows a series of undertakings from Foxtel.

“This is a great outcome for consumers because we will now be able to create a company of scale that will deliver innovative new digital products and services, and parity for regional and city customers,” said Foxtel’s Chief Executive Officer, Richard Freudenstein.

“The new national Foxtel will be one of Australia’s most progressive and dynamic media companies, it will directly employ 2500 people and support a subscription television sector which spends close to $600 million a year on new and original Australian content,” Freudenstein added.

“Bringing together Austar, Foxtel and XYZ will unite a number of the most watched channels in the lifestyle and entertainment genres. Importantly, it will enable us to keep building our offering of high quality, compelling content including sport, movies, news, music, children’s, and documentary channels using world-leading technology. This will benefit the 2.2 million subscriber households and over 6 million viewers of our combined platforms, as well as potential consumers.”

The undertakings the ACCC has accepted cover five broad areas:

– Non-exclusivity over a broad range of channels – Foxtel is undertaking not to acquire or renew exclusive new distribution rights to a broad range of linear and time-shifted channels and associated entitlement and subscription VOD (video-on-demand) content unless another bidder is seeking exclusive rights. These channels include Disney Channel, SKY NEWS, ESPN, 13th Street, and KidsCo.

This undertaking will ensure IPTV players will have access to a wide range of channels and entitlement and subscription VOD content, including where they wish to bundle content services with telephony and broadband services.

– Non-exclusivity over TVOD movie rights – Foxtel is undertaking not to exclusively acquire TVOD (transactional video–on–demand) rights to movies, unless another bidder is seeking exclusive rights.

This undertaking will also ensure IPTV players will have access to transactional movie services including where they wish to bundle these movie services with telephony and broadband services.

– Non-exclusivity over movies supplied by major studios and key independents – Foxtel is undertaking not to acquire or renew exclusive new distribution rights to include movies in linear channels or EVOD (entitlement video-on-demand) services from more than 50% of the major studios or more than 50% of the eight key independent distributors in Australia. Foxtel is also undertaking not to acquire or renew exclusive new distribution rights to include movies in SVOD (subscription video-on-demand) services, except for new release movies that Foxtel is permitted to acquire exclusively for inclusion in linear channels for a period of 18 months.

This undertaking will ensure that IPTV players and other content aggregators will continue to have access to a broad range of movies which they will be able to provide to their customers as part of linear channels, EVOD services and SVOD services.

– Signal access to facilitate IPTV delivery by third parties – Foxtel has undertaken that it will provide the signal of linear channels to IPTV players either via an internet exchange (located in Sydney) or via access to the satellite signal. Foxtel will recover its reasonable and attributable costs of providing such signals.

This undertaking will enable IPTV players to efficiently receive the channel signal for channels to which they have negotiated agreements.

– Special Access Undertaking extended to Austar set top units – Foxtel has also agreed that it will extend its current Special Access Undertaking (which the ACCC accepted in 2007) to Austar set top units.

This extended undertaking will enable independent channel providers to access Foxtel and Austar’s over 2.2 million subscribing households in order to sell their channel directly to the combined Foxtel and Austar customer base.

Foxtel currently services the major metropolitan cities and Western Australia, while AUSTAR services rural and regional Australia. Foxtel and Austar share 50:50 ownership of the major subscription TV channels group XYZ Entertainment. When the merger is completed, Foxtel will own 100 per cent of XYZ.

The transaction is subject to final Federal Court approval on 13th April.

Until the transaction is completed and integration of the two companies has commenced, Foxtel will continue to service Foxtel customers and Austar will continue to service Austar customers.

Foxtel expects to complete the merger in late May 2012.

Source: Mediaweek

13 Responses

  1. One more question.

    I guess when they merge it will mean the end of the Austar online guides. I use them everyday and don’t like the Foxtel ones as much as the Austar ones also include the FTA channels. I’ve not bought a printed guide for over a year.

  2. @Ashton – thanks for the recap, I got lost in the jargon and in most interviews they seemed more interested in competition from FTA and the Internet. I guess the Austra customers will get letters and emails in the coming weeks to explain the changes.

    I’m on the fence about a new STB. My Austar one is about 10 years old and I think its starting to fail with loads of interference and picture/sound breakups most days. Even when the weather is clear and fine. But I fear the Foxtel STB won’t allow me to record to my PVR anymore, without paying extra for the IQ one and having my recordings ‘trapped’ on the HDD with no way to burn to DVD. Yes I know ‘first world’ problems are the worst LOL.

  3. Just got Austar disconnected as of 12:01am. Not sure if this is advantageous or not as far as connecting with Foxtel a little later on. It certainly isn’t great value at the moment. Pending what happens regarding NRL rights for next year I may be very interested in paying the exorbitant price.

  4. Hopefully with the greater revenue Foxtel will be seeing they can use the extra income to steady the rate of Subscription cost increases and roll out more channels to offer better value for money. But I’m not holding my breath.

  5. The big question surrounding this, will be now, whether Foxtel goes ahead and develops a iQ3 variant with a FTA HD tuner, to issue to Austar customers (and to Foxtel customers on request) to replace the MyStar PVR.

    Otherwise, it could turn out to be fairly expensive for Foxtel, negotiating retransmission agreements with regional networks: although NBN and 7 QLD, could be done as extensions of existing metro deals.

  6. @Craig, CEO of Foxtel has said all customers will get all channels, foxtel top box and exclusive services such as Foxtel App for iOS, new SKY News Active & Local among other things.

  7. All I want to know is how this affect me as an Austar Customer? I’ve seen the news on SkyNews and they keep talking about exclusive channels, are they talking about services outside Pay TV like Internet TV?

    Will we be forced into a new STB and will it cost us more or less to get the channels we want to see?

  8. Yippee….for now and will be interesting to see what deals Telstra start offering regional customers now that they have “parity” with metro customers.
    Hopefully now we will get all the HD channels on offer – just flick that switch tonight.

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