great article

Hot stock: Austar

Sometimes, even a sniff test can be a valuable tool to determine if a decision is the right one or not. On that basis, the Australian Competition and Consumer Commission (ACCC) has a severe mid-winter cold after it initially blocked the merger between Austar and Foxtel.

According to the regulator, there is not much in common between the free-to-air television networks and the pay television industry. Under the same logic, newspapers do not compete with radio stations.

The ACCC has decided to do a bit more homework on the proposed merger between the two pay television companies and will make a final decision on September 8.

Hot stock: Austar
Greg Fraser
August 2, 2011
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Austar.

The ACCC will make its final decision on an Austar and Foxtel merger on September 8. Photo: Erin Jonasson

Sometimes, even a sniff test can be a valuable tool to determine if a decision is the right one or not. On that basis, the Australian Competition and Consumer Commission (ACCC) has a severe mid-winter cold after it initially blocked the merger between Austar and Foxtel.

According to the regulator, there is not much in common between the free-to-air television networks and the pay television industry. Under the same logic, newspapers do not compete with radio stations.

The ACCC has decided to do a bit more homework on the proposed merger between the two pay television companies and will make a final decision on September 8.
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Understandably, Foxtel?s chief executive Kim Williams has already said the process will go to court if the ACCC doesn?t come up with the right decision, so the situation could take a bit longer to resolve.

It beggars belief that the ACCC did not mention the anti-siphoning regime even once in its statement of issues.

This silly set of rules creates a list of protected sports events that allows the free-to-air television networks first go at buying the broadcasting rights, ahead of the pay television companies.

Surely that spells out in capital letters that competition between pay TV and free TV is as fierce as it is between Carlton and Collingwood or Manly and South Sydney.

Picture this scenario in your lounge room at home. A set-top box provides an electronic program guide as well as full video functionality to record programs, or pause and rewind live TV. You can flick through a number of different channels that span content across sport, movies, comedy, news and drama but settle for a documentary sourced from the BBC.

Is this a pay TV household or a free-to-air TV household? It could be either, of course. The ACCC doesn?t seem to understand this.

Price

If the ACCC?s decision becomes final and the merger is blocked, we would expect Austar?s share price to reflect the underlying performance of its existing business. On that basis, it still looks cheap at about $1.04. If the regulator?s decision is reversed, then the upside to the share price is $1.52 a share ? the price which Liberty Global and Foxtel have agreed for the m

Read more: http://www.smh.com.au/money/investing/hot-stock-austar-20110802-1i99s.html#ixzz1U45jcbbU


Read more: http://www.smh.com.au/money/investing/hot-stock-austar-20110802-1i99s.html#ixzz1U45ZpfAA