I THINK WE'RE IN THE CLEAR!!Ten, Seven networks say they have no...

I THINK WE'RE IN THE CLEAR!!

Ten, Seven networks say they have no objection to Foxtel's bid for Austar
TWO commercial free-to-air networks have taken the unusual step of raising no objection to Foxtel's $1.9 billion takeover bid for Austar.

The Seven and Ten networks have lodged separate submissions with the Australian Competition & Consumer Commission playing down the regulator's concerns about the proposed acquisition.

The fate of Foxtel's $1.52 per share friendly offer rests with the ACCC, which in July issued a preliminary view that the deal would breach the law by substantially reducing competition in the pay-TV market.

Austar investors and pay-TV executives had taken some comfort from the Federal Court defeat of the commission's attempt to block the Metcash purchase of the Franklins supermarket chain. However, Austar shares sank almost 10 per cent to $1.13 on Friday when ACCC chairman Rod Sims said the regulator would appeal against the decision.

Friction between the free-to-air and pay-TV industries has increased in recent years with the introduction of digital multi-channels that have slowed Foxtel and Austar subscription growth.

Foxtel chief executive Kim Williams criticised a Freeview advertising campaign promoting the new channels as well as the federal government decision last year to gift the commercial networks hundreds of millions of dollars in licence fee rebates.

However, the Kerry Stokes-controlled Seven is understood to have lodged a submission arguing that Foxtel and Austar are effectively two franchises of the same business. Combining two firms that do not compete for content or customers, Seven argues, will not result in a lessening of competition.

Mr Stokes is no stranger to the pay-TV industry. His Seven Group Holdings holds 24 per cent of James Packer's Consolidated Media Holdings, which owns 50 per cent of Fox Sports and 25 per cent of Foxtel. (News Limited, publisher of The Australian, has identical shareholdings in Foxtel and Fox Sports.)

Seven was behind the lengthy and costly C7 case against Foxtel, News, Telstra and Mr Packer among others.

In 2007, the Federal Court ruled that Seven had failed in its attempt to prove its competitors colluded to kill C7 -- its fledgling pay-TV business.

The court ruled that pay-TV was a separate market to free-to-air in the C7 case and it is believed Seven has not gone against this view in its recent submission.

The ACCC said in its preliminary statement of issues paper on the Foxtel/Austar merger: "FTA television is not a sufficiently close substitute to be considered in the relevant market for the purposes of this competition analysis."

Most TV executives privately describe the suggestion that pay-TV does not compete in the same market as free-to-air as flawed.

A spokeswoman for Ten confirmed Ten had lodged two submission. The first "acknowledges that there is competition in the market for advertising revenue and program acquisitions" while the second "addresses the need for a merged entity to ensure continued access to the subscriber services provided through Austar's My Star Box".

Ten believes Austar's set-top box has "better electronic program guide and retransmission arrangements for the free-to-air platform" and wants to see it maintained.

Ten has been drawn closer to pay-TV in the past 12 months. Mr Packer bought an 18 per cent stake in the network last November and sold half his stock to News Corporation director Lachlan Murdoch. Mr Murdoch is currently interim chief executive of Ten. The ACCC has extended its market inquiries into the Austar deal and it not likely to make a final decision until next month.

Mr Williams has previously hinted Foxtel could take the regulator to court if it does not reverse its preliminary decision.
http://www.theaustralian.com.au/business/media/ten-seven-networks-say-they-have-no-objection-to-foxtels-bid-for-austar/story-e6frg996-1226134290847