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Foxtel gets foxed by ACCC

Green light for Austar merger, red light for IPTV

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Foxtel’s ambitious IPTV plans have been significantly thwarted following the Australian Competition and Consumer Commission’s conditions which will allow Foxtel’s AUS$1.9 billion takeover of pay- TV operative Austar to go ahead.

While Foxtel has passed its last hurdle in the acquisition with the green light from the regulator, it comes with significant conditions.

Under the ACCC‘s enforceable undertakings Foxtel will be prevented from acquiring exclusive IPTV rights for a range of attractive television program and movie content.

These prohibitions include: linear channels supplied by independent content suppliers, including more than 60 linear channels that are currently broadcast by Foxtel and many more that are broadcast internationally; subscription Video on Demand (SVOD) rights to current or past seasons of television programs that form part of a linear channel supplied by an independent content supplier; movie linear channels from more than 50% of the eight major movie studios or more than 50% of the eight specified independent movie studios and SVOD rights to movies, except for an 18 month window in relation to the movie studios from which FOXTEL is not prohibited from acquiring exclusive linear rights.

The pay-TV giant will also be forbidden to acquire any movie delivered on a Transactional Video on Demand (TVOD) basis.

The ACCC has also decreed that Foxtel will also be prevented from acquiring exclusive mobile rights to the aforementioned content in the case that those rights are sought by competitors to combine with IPTV rights.

ACCC chairman Rod Sims said “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.”

The regulator was primarily concerned by the merged entity’s market power which would in turn give Telstra, Foxtel's largest shareholder, greater market power in regional fixed broadband and telephony markets.

The undertaking also aims to further lower barriers by requiring Foxtel to provide necessary signal access to linear channels distributed by independent content suppliers to third parties.

The undertaking will also extend Foxtel’s 2006 Special Access Undertaking, allowing content suppliers to gain access to Austar subscribers as well as Foxtel subscribers.

“The ACCC will also continue to consider whether there is a need to advocate for regulatory intervention in these markets,” Sims said.

A Public Competition Assessment will be issued by the ACCC in due course.

Telstra Digital Media Group Managing Director Rick Ellis said the deal still allowsTelstra to expand its Foxtel on T-Box offering into some Austar areas over time. “Telstra will provide further detail on its plans to expand the availability of FOXTEL on T-Box at a later date.”

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