Foxtel's $1.9 billion acquisition of Austar is set to proceed after the Australian Competition and Consumer Commission (ACCC) gave the go-ahead, raising questions about the structure of the company's merged sales and marketing divisions.
The merger will see the Foxtel and Austar become one company, with Austar's operations absorbed completely into the Foxtel brand, including marketing. The exact fate of Foxel's and Austar's current marketing budgets and teams, which include Foxtel's sales and marketing head Ed Smith, Austar's sales and marketing boss Nikki Warburton and Foxtel's marketing director Chantal Walker, is not yet publicly known.
"Marketing will be reviewed as part of the merger process," a Foxtel spokesperson told AdNews.
“The point of the merger will be to integrate the entire business, including marketing, into one brand: the Foxtel brand," an Austar spokesperson told AdNews. "This is a matter for Foxtel, who are currently working through the process of how things will be approached. Work has begun in the planning stage, but it will all ultimately be a decision for them.”
The undertakings which allowed the merger to be approved were made in response to concerns over a lack of marketplace competition. They will prevent Foxtel from acquiring exclusive internet protocol television (IPTV) rights for channels, programs or movies, as well as any films delivered via transactional video on demand (TVOD).
These concessions also prevent Foxtel from acquiring exclusive subscription video on demand (SVOD) rights to current or past seasons of television programs and to mobile content when those rights are sought by competitors to combine with IPTV rights.
The ACCC stated in a press release this morning that the “main areas for concern” in regards to the merger were “in the national market for the retail supply of subscription television services, particularity in relation to the developing IPTV field, and a number of regional markets for the supply of fixed broadband and fixed voice telephony products”.
Many of these concerns were based on Telstra’s 50% ownership of Foxtel, which it was feared would lead to Telstra “offering a superior 'triple play' of fixed voice, broadband and IPTV services” post-merger based on access to Austar’s current subscriber base and Telstra's existing regional infrastructure.
“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,” ACCC chairman Rod Sims said in a statement. “This would in turn give Telstra, Foxtel's largest shareholder, greater market power in regional fixed broadband and telephony markets.”
Sims continued: “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. Taking into account the undertaking which has been offered by Foxtel, the ACCC is satisfied that the proposed acquisition is unlikely to substantially lessen competition.”
Both Telstra and Austar have responded positively to the ACCC's announcement, with spokespeople from both companies stating the decision was “welcome”.
“This is a great outcome for consumers because we will now be able to create a company of scale that will deliver innovative new digital products and services, and parity for regional and city customers,” said Foxtel’s chief executive, Richard Freudenstein. “[The merger] will give us the scale to keep investing and innovating in both content and technology for consumers across Australia in an increasingly competitive market.”
The merger remains subject to Federal Court approval at a hearing scheduled for 13 April.
Until the merger commences, Foxtel will continue to service its current customers and Austar will service Austar customers.
Foxtel expects the merger to be completed by late May.
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