The competition regulator has put the brakes on Seven Group's ability to acquire James Packer's Consolidated Media Holdings (CMH), leaving the path open for News Limited to snatch up the business.
While the Australian Competition and Consumer Commission (ACCC) has given News Limited the green light to acquire CMH, Seven has been waiting on a decision for several weeks. The race for CMH started when Packer revealed he wanted to sell his controlling stake in the company earlier in the year.
Today ACCC chairman Rod Sims said Seven's plans had been blocked because it would give the company substantial interests in both a major free-to-air network and the largest pay TV company in Australia.
Seven Group Holdings already owns 23.5% of CMH, and around 33% of the shares in Seven west Media. Meanwhile, CMH owns 50% of Fox Sports Australia and 25% of Foxtel.
Seven Group was looking to increase its holding in CMH to 100%, which would lead to an increased hold on Fox Sports Australia and Foxtel, in addition to its significant holdings in Seven West Media.
Sims said: “The ACCC is concerned that the proposed acquisition would put Seven Network in a position of advantage over other free to air networks in relation to joint bids and other commercial arrangements with Fox sports for the acquisition of sports rights. Being able to come to such arrangements with Fox Sports would enhance Seven Network's ability to acquire the rights to premium sports.
“Access to premium sporting content is vital to the ability of free to air networks to compete strongly. The ACCC considers that the proposed acquisition would significantly reduce the ability of Seven Network's competitors to acquire such content.”
Seven Group had not officially made a bid for CMH, but had indicated it wanted to know if it would be able to buy the company. By blocking Seven Group's ability to bid for CMH, the ACCC has opened the door for News Limited to buy the company.
News Limited has already made a $2 billion bid for CMH, and the ACCC has approved the bid.
If News Limited goes through with the deal, it will have to buy out Seven Group's holding in the company.
Seven Group said in a statement: “Seven Group Holdings Limited acknowledges the ACCC's decision announced today in relation to Consolidated Media Holdings Limited and intends to vote in favour of the Scheme Resolution to give effect to the News Limited proposal, as recommended by the directors of CMH.”
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