The ACCC gives birth to a monopoly By Neil Shoebridge, managing editor Thursday, November 14, 2002
The Australian Competition & Consumer Commission's (ACCC) decision to approve the content-sharing deal between Foxtel and the pay-television division of SingTel Optus is a big blow for most mainstream media companies, particularly Seven Network, Ten Network and John Fairfax Holdings (the owner of BRW). No matter how the ACCC tries to justify its decision on the basis of the sick financial state of the pay-TV industry, it has handed a capital-city monopoly to the three owners of Foxtel - News Corporation, Publishing & Broadcasting Limited (PBL) and Telstra. Australia's already concentrated media industry just became more concentrated.
Seven, Ten and Fairfax argued long and hard against the Foxtel-Optus deal, and the ACCC did extract some concessions from the two pay-TV companies, which will now spend about $1 billion on new digital technology to further cement their dominance over the industry. Foxtel is clearly the dominant partner in the marriage, giving News Corporation, PBL and Telstra a powerful new media vehicle. Telstra, for example, will use the expanded business to start offering telephone, internet and pay-TV package deals - something no other telecommunications company will ever be able to match.
Did the ACCC have an alternative to approving the deal? Optus repeatedly said that if the deal was blocked, it would quit the pay-TV and local telephone call markets - handing a monopoly to Foxtel and Telstra. Maybe Optus would have carried out its threat. Maybe another company would have stepped into the pay-TV industry to challenge Foxtel (yes, the newcomer would have needed deep, deep pockets and the patience of Job). Maybe one of Australia's junior telecommunications companies would have pushed harder into the local call market. Thanks to the ACCC, we will never know the answers to those questions.
Foxtel and Optus say they will give access to their cable networks to other media companies, such as Seven, Ten and Fairfax. That is good news for lawyers, who will make a small fortune from the legal battles over access. The ACCC says it is concerned about the potential for the Foxtel-Optus deal to increase Telstra's power and will discuss its concerns with the Howard Government. But clearly those concerns were not enough to convince the ACCC to block the deal.
The owners of Foxtel and Optus will depict the ACCC's decision as a victory for consumers. They have started already: the first paragraph of the page-one story in today's The Australian - which is owned by News Corporation - describes how the Foxtel-Optus deal means pay-TV subscribers will now have the choice of 200 digital channels, and how "phone users will be offered all-in-one packages of internet, pay-TV and telephone services". Expect to see a lot more shameless promotion of Foxtel-Optus in News and PBL's media outlets over the next few months and years.
The ACCC's chairman, Allan Fels, says the Foxtel-Optus union means the pay-TV industry will now be "a little more viable than at present". That is nice for the owners of Foxtel and Optus, but cold comfort for anyone who worries about media ownership concentration and believes that monopolies are wrong." ****************************************
Sour grapes by the writer is understandable here but at the end of the day, consumers will be better off which is indeniable ...
