The Australian Competition and Consumer Commission (ACCC) will not oppose Foxtel's $2.5 billion acquisition of pay TV rival Austar, despite worries about the impact that the deal will have on the burgeoning IPTV market.
In order to address concerns surrounding the merger of Austar with Foxtel — jointly owned by Telstra, Rupert Murdoch's News Corporation and James Packer's Consolidated Media Holdings — announced in May last year, Foxtel submitted an undertaking to the ACCC last month. The submission stated that it would not exclude IPTV providers from acquiring rights to content, allowing access to some but not all sports and entertainment content currently locked up by Foxtel.
It is this undertaking, the ACCC said today, that has paved the way for the watchdog to approve the deal.
"By reducing content exclusivity, the undertakings will lower barriers to entry and promote new and effective competition in metropolitan and regional telecommunications and subscription television markets," ACCC chair Rod Sims said in a statement.
"Taking into account the undertaking, which has been offered by Foxtel, the ACCC is satisfied that the proposed acquisition is unlikely to substantially lessen competition."
Foxtel will still be able to acquire exclusive rights to individual sports, but the ACCC noted that the undertaking will prevent Foxtel from acquiring exclusive mobile rights to content where its competitors are seeking to combine mobile rights to that content with IPTV rights.
Concerns were previously raised by iiNet that many popular channels were left out of the exclusivity ban, including the National Geographic and Nickelodeon channels, which would make it difficult for emerging IPTV players to compete with Foxtel. The ACCC said that following further discussions with Foxtel, the number of channels included was expanded to 62, including National Geographic and Nickelodeon.
But iiNet's chief regulatory officer Steve Dalby said in his submission to the ACCC last month that the main issue with the undertaking is that it doesn't address the difficulties faced by smaller IPTV players for negotiating content in the first place.
"The undertaking does nothing to address the commercial challenges faced by iiNet in negotiating with large rights holders, such as the major movie studios. These very real commercial barriers include terms such as 'minimum subscriber numbers' imposed by content providers," he said.
"If IPTV providers are not able to attract large numbers of subscribers, then they will never be in a position to negotiate access to compelling content, particularly in a competing bid against a merged Foxtel and Austar."
Comment on today's ACCC announcement has been sought from iiNet this morning.
Telstra said today that the ACCC's decision is a win for consumers.
"The merger between Foxtel and Austar will create a pay TV company that will be able to provide innovative content for customers across Australia," Telstra Digital Media group managing director Rick Ellis said in a statement.
"It will also enable Telstra to expand its Foxtel on T-Box offering into some Austar areas over time, enabling regional Australians in those areas to enjoy the same high-quality IPTV services as those who live in metropolitan areas."
The list of channels that Foxtel will be prohibited from acquiring exclusive rights to is: