Foxtel-Fox Sports merger unopposed by regulator

The merger between Foxtel and Fox Sports has not been opposed by the ACCC, with News Corp to own 65 percent of the proposed merged entity while Telstra owns the remaining 35 percent.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has announced its decision not to oppose the merger of pay TV provider Foxtel and sports channel Fox Sports.

The proposed merger would not substantially lessen competition, the ACCC found, despite increasing News Corp's stake in Foxtel as a result. News Corp owns 100 percent of Fox Sports and half-owns Foxtel with Telstra; following a merger, News Corp would own 65 percent of the company while Telstra would own 35 percent.

"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," ACCC Chair Rod Sims explained.

"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."

According to Sims, the ACCC looked into how the merger would affect the sporting content acquisition market, as well as its affect on the content-telco bundling market. Under the proposed transaction, Telstra would be made the exclusive telecommunications partner of Foxtel's digital products, with the ACCC saying it was important to ensure consumers would still have access to Foxtel content.

"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," Sims said.

"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 defined "triple play bundles" as being voice, broadband, and content offerings.

Telstra had added Foxtel packages into its post-paid mobile offerings several months ago, offering customers 12 months of free access to content packs from the Foxtel Now streaming service.

Customers signing up for Telstra's AU$99 Go Mobile Plus and Go Mobile Swap Lease plans prior to December 25 will be given a 12-month subscription for one Foxtel Now starter pack, as well as 20GB of data per month.

Paying AU$129 per month will give customers 30GB of data and two Foxtel Now starter packs; AU$149 will provide three starter packs and 50GB of data; and AU$199 will provide 100GB of data and three starter packs.

The five packs to choose from are Pop, which includes entertainment, comedy, drama, and reality TV, as well as HBO dramas and Foxtel Originals; Drama, which includes BBC, HBO, and Foxtel Originals content; Docos, which includes the Discovery, Nat Geo, BBC, Crime and Investigation, and History content; Kids channels in a "safe" app; and Lifestyle, which includes content from food, homes, entertainment, and reality TV channels.

The post-paid plans also include data-free streaming on Apple Music and Telstra's AFL and NRL apps.

According to Telstra, video consumption now accounts for 38 percent of its mobile network usage -- up by 40 percent year on year -- and is forecast to rise to 75 percent of its mobile traffic within the next five years.

Optus is also focusing on media content, in July unveiling an entertainment partnership with National Geographic as part of what CEO Allen Lew told ZDNet is the telco's next move to become a "mobile-led multimedia service provider".

Lew had previously said that Optus is a unique position to be the first in Australia to take advantage of the convergence between telecommunications, media, and technology after beginning its self-described transformation into a multimedia company with the acquisition of the exclusive Australian broadcast rights for the English Premier League in 2015.

Foxtel, meanwhile, has been launching broadband services across the Australian government's National Broadband Network (NBN) to bundle home broadband with its pay TV packages.

In October, Foxtel added hybrid fibre-coaxial (HFC) services to its NBN offerings, expanding its NBN footprint out by 50 percent when combined with its fibre-to-the-node and fibre-to-the-basement and fibre-to-the-premises services.

Foxtel, which announced a quarterly loss of $23 million (AU$31.2 million) earlier this year due to the closure of subscription video-on-demand provider Presto, said its push into the NBN market as a retail service provider would "accelerate" over the next few months in an effort to complement its entertainment offerings.

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