Regulator approves Foxtel / TEN deal

Foxtel has been given the thumbs up to purchase 15% of shares in Network TEN.

Competition regulator The Australian Competition and Consumer Commission and media watchdog the Australian Communications and Media Authority have both not opposed the buy-in, which also sees Foxtel purchase a 24.9% interest in MCN sales group.

The good news falls on the 20th anniversary of Foxtel being on air in Australia and despite some objections it would impact on bidding of sports broadcast rights.

The proposed transaction remains subject to certain conditions and regulatory approvals, including by the Foreign Investment Review Board.

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 sales representation agreement, by which MCN is selling advertising for TEN, came into effect on 1 September. The teams are now integrated and working well to create better outcomes for clients of both TEN and Foxtel”, he said.

TEN Non-Executive Chairman, David Gordon, said: “We are very pleased to receive clearance from the ACCC and the ACMA for the proposed transactions.

“The approval from the ACCC and the ACMA represents another important step for TEN to conclude the strategic review process initiated by the Board last year.

“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,” he said.

ACCC chairman Rod Sims said, “While the acquisitions will lead to a greater alignment of Foxtel’s and TEN’s interests, and will increase the degree of influence Foxtel has over TEN, the ACCC considers that the proposed acquisitions, on their own, are unlikely to result in a substantial lessening of competition.

“The ACCC considers 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 that is attractive to their viewers..

“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.”

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.”

ACMA details its criteria in a statement:

The ACMA looked at the question of control under the BSA, both from:

a ‘deemed control’ perspective – whether on completion of the proposed arrangements, company interests in Ten controlled by Mr Murdoch would exceed 15 per cent thereby putting him in a position of ‘deemed’ control of Ten; and
an ‘actual control’ perspective – whether arrangements or relationships would put Mr Murdoch himself, or together with an associate, in a position to control Ten.
It considered submissions and other relevant information provided either voluntarily or in response to a significant number of formal notices given under section 173 of the BSA.

On ‘deemed control’, it is clear on the information currently available to the ACMA that the company interests controlled by Mr Lachlan Murdoch in Ten through his private investment company and his traced company interests through Foxtel’s proposed shareholding in Ten would not exceed 15 per cent.

On ‘actual control’, the ACMA considered the proposed arrangements between Foxtel and Ten, as well as Mr Murdoch’s connections with Ten:

through his private investment company;
in his role as Non-Executive Co-Chairman of News Corporation;
in his role as Executive Chairman of 21st Century Fox; and
through various potential ‘associate’ relationships.
The ACMA’s views are based on the information available at this time and the evidence before it. It will continue to monitor the relationship between Mr Murdoch and Ten to ensure ongoing compliance with the diversity and media control rules.

This post updates.