Competition watchdog The Australian Competition and Consumer Commission will not oppose Lachlan Murdoch and Bruce Gordon’s bid for a takeover of Network TEN.
Under existing rules Bruce Gordon cannot buy TEN because of the “reach rule”, which prevents a television network from broadcasting to more than 75 per cent of the population. Lachlan Murdoch cannot buy TEN because of the “two-out-of-three rule”, which prevents the ownership of a newspaper, TV network and radio station in the same market.
The ACCC today said it had no concerns about Gordon’s involvement in the transaction but Murdoch was subject to examination.
An alternative bid by Oaktree Capital Management and Anchorage Capital Group is rumoured to have been withdrawn.
The ACCC has announced that it will not oppose Birketu Pty Ltd (Birketu) and Illyria Nominees Television Pty Ltd’s (Illyria) proposed joint bid to acquire Ten Network Holdings Limited (Ten) (ASX: TEN).
Birketu, owned by Bruce Gordon, and Illyria, owned by Lachlan Murdoch, propose to each acquire a 50 per cent interest in Ten, and to operate it as a joint venture entity. Mr Gordon and Mr Murdoch have links with a number of media assets in Australia.
“The ACCC considers that this deal is unlikely to result in a substantial lessening of competition in any relevant market, despite it lessening competition via a greater alignment of Mr Murdoch’s, Mr Gordon’s, and Ten’s interests,” ACCC Chairman Rod Sims said.
The ACCC does not have significant concerns about the potential for overlap between Mr Gordon’s WIN interests and Ten as the networks are broadcast in separate geographic areas.
“Our review focussed on how the transaction would result in an expansion of Murdoch interests in Australian media, when they already have a significant influence in newspapers, Foxtel, radio, and television production,” Mr Sims said.
“We considered whether the acquisition would significantly reduce competition, by causing a reduction in the quality and range of news content, or increasing the negotiation power of the combined Ten/Foxtel/News Corporation.”
The ACCC considered feedback from a wide range of market participants, including broadcasters, sports rights holders, independent content producers, and advertisers.
“On the issue of the effect on competition in the supply of news services, the ACCC took into consideration competition from news providers on other media platforms and in particular, the other free-to-air networks, given Seven and Nine have a stronger position in the market than Ten. Ten news in particular suffers the lowest news ratings of the three commercial networks and has a relatively small online presence,” Mr Sims said.
“The ACCC also considered the effect on competition in the acquisition of sports rights and other types of content. The parties will continue to face competition from the remaining free-to-air networks as well as streaming services for the acquisition of content.”
In assessing the effect on the advertising market, the ACCC took into account that Ten and Foxtel are already commercially aligned through their MCN joint venture. MCN acts as an agent for both Foxtel and Ten to sell advertising.
“The ACCC is not oblivious to the fact that significant influence can be exerted through partial shareholdings and family connections, however the ACCC did take into consideration that this is a proposed 50 per cent acquisition by Illyria,” Mr Sims said.
“Even though incentives to compete may be weakened if the proposed acquisition proceeds, Ten and Foxtel/News Corporation will remain competitors in a number of markets and will be subject to our competition laws which prevent them from making anti-competitive agreements.”
“While this transaction will result in some reduction in diversity across the Australian media landscape, we have concluded it would not substantially lessen competition, which is the test the ACCC is required to assess acquisitions against,” Mr Sims said.
“The Australian media market is becoming increasingly concentrated and we will continue to closely examine future media mergers in light of the impact any future loss of competition may have on both choice and quality of news and content produced for Australian audiences.”