All may not be well with the proposed Foxtel Ten deal as the ACCC has raised concerns over the impact the $77 million deal will have on competition in the market around advertising services, TV and sports rights negotiations and supply of FTA TV services.
The competition watchdog has issued a statement of issues regarding the deal, ahead of making a full ruling on whether the deal can go ahead.
In its statement, the ACCC outlines that it aims to offer its initial views on any competition issue arising from the deal as well as identify areas for further enquiry. It give parties an opportunity to comment and submit information.
In it, the ACCC says its “preliminary view is that these effects may substantially lessen competition in one or more of the following markets”.
The deal is being considered under section 50 of the Competition and Consumer Act 2010, which prohibits acquisitions which lessen competition in the market.
There are a number of issues that “raise concerns” around the deal:
- it may favour Ten in the bidding for sports content against other free-to-air (FTA) television providers
- or reduce or even eliminate competition between Foxtel and Ten for the supply of advertising services.
Concerns around the supply of advertising services include that Ten may have access to data about viewer habits gleaned through Foxtel's set top box, which the other FTA networks will not have. A lessening of competition could lead to an increase in pricing through MCN, the ACCC points out and that MCN and Ten could “coordinate offers” which could result in increasing prices to advertisers.
However, MCN head of sales and marketing Mark Frain, told AdNews last week ahead of the ACCC statement that whether or not the deal goes through, advertising agreements between Ten and MCN will not be affected. MCN and Ten have already merged their sales teams, with MCN taking on representation of Ten's television, online catch-up and digital properties from 1 September.
The ACCC’s preliminary view is that these effects may substantially lessen competition in one or more of the following markets:
- markets for the acquisition of television content, particularly sports contents
- markets for the supply of FTA television services (including a broader market for the supply of television viewing services encompassing both FTA and subscription television (STV) services)
- markets for the supply of television advertising services.
The concerns include the potential for Ten and Foxtel to enter into joint bids for sorts rights that reduces the ability of other FTA networks to compete, and increases the incentive for Foxtel to favour Ten over partnering with other FTA networks in bidding for rights that are split across FTA and STV.
It does not, however, consider the deal will cause any competition issues in the subscription video on demand market.
The deal would see Foxtel acquire a 15% stake in Ten, and Ten acquire a 24.99% stake in sales house MCN, and potentially a 10% stake in Presto.
The decision was expected last week but was delayed. It wasn't known if the ACCC would issue a full ruling, or as it has done, request further evidence.
Ten said this morning it is in the process of reviewing the document and preparing a response, emphasising that "Ten firmly considers that the objective evidence establishes that the proposed transactions will increase competition in the relevant markets".
Submissions of information are due by 28 September, with a final decision expected on 22 October.
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