The Australian Competition and Consumer Commission (ACCC) has sought industry feedback on Foxtel’s proposed takeover of Austar.
It follows the submission of proposed undertakings from Foxtel to the ACCC around issues of both exclusive content and channel signal access in light of the $2.5 billion acquisition bid in May last year.
ACCC chairperson, Rod Sims, said the undertaking was offered by Foxtel to address the damage to competition that was likely to occur as a result of the acquisition.
“However, it is not intended to resolve competition or structural issues that may already exist in the relevant markets and are unrelated to the proposed acquisition,” Sims said in a statement.
According to the watchdog, the main areas of concern are for the retail supply of subscription television services and in regional markets for the supply of fixed broadband and fixed voice telephony products.
Specifically, the undertakings cover four main areas including non-exclusivity over the Disney Channel, SKY NEWS, ESPN, 13th Street and KidsCo., non-exclusivity over transactional video-on-demand movie rights to new release films, signal access to enable IPTV delivery by third parties and extending the special access undertaking to Austar set-top units.
“The proposed acquisition would bring together the two main subscription TV industry players in Australia each with a substantial customer base and significant access to key content,” Sims said.
“This would in turn give Telstra, Foxtel’s largest shareholder, greater market power in fixed broadband and telephony markets.”
Following ACCC approval of the acquisition, Foxtel will no longer be able to enter exclusive agreements to acquire internet protocol television (IPTV) rights for a range of content to enable a fair playing field with competitors of Foxtel and Telstra.
While issues of competition are expected to arise around exclusive sports rights, the watchdog said these concerns are independent of the proposed takeover.
“While premium domestic sport is therefore not offered as part of the undertaking the ACCC considers that the package of content that will be made available will be sufficient to address the competitive harm that is likely to arise as a result of the proposed acquisition.”
The undertaking will also require Foxtel to provide necessary signal access to linear channels distributed by independent content suppliers to third parties, and extend its special access undertaking, which enables content suppliers to access Austar subscribers as well as Foxtel subscribers.
In a statement to the ASX, Foxtel chief executive, Richard Freudenstein, maintained the acquisition would not lessen competition.
“Foxtel’s undertakings will ensure that a broad range of content continues to be available for IPTV players,” Freudenstein said in a statement.
Submissions to the ACCC close on 20 March.
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