It’s the end of the road for Seven Group Holdings (Seven) as the ACCC has decided to oppose its proposed acquisition of Consolidated Media Holdings (CMH). This is the latest decision of the ACCC to consider competition issues in the world of TV (following recent assessments in Foxtel/Austar and also in News Corporation/CMH).
To set the scene, Seven is active in free to air broadcasting whilst CMH is a media investment company, with key interests in pay TV companies, Fox Sports and Foxtel.
In considering the merger of these free to air and pay TV players, the ACCC identified competition concerns in the national market for the supply of free to air television services. The ACCC appears to have followed the reasoning outlined in its statement of issues.
The ACCC highlighted a number of key points in its statement of issues, including:
· the importance for free to air broadcasters to be able to partner with Fox Sports or Foxtel (in relation to the acquisition of sporting rights),
· concerns around Seven being able to exercise significant influence over Fox Sports and Foxtel so that other free to air broadcasters would be excluded from jointly bidding for the acquisition of sporting rights, and
· concerns about Seven having access to certain confidential information (relating to negotiations between Fox Sports and the other free to air broadcasters).
So, in announcing its decision to oppose the acquisition on 11 October 2012, Rod Sims signalled that:
“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.”
This announcement is not surprising given that the ACCC has already signalled its view (in previous assessments and also in its media mergers guidance paper of 2006) that when it comes to maintaining competition in television markets, access to content is key.
Content remained the focus in this decision. The likely post merger scenario would have seen free to air broadcasters (other than Seven) being prevented from gaining access to key sports content. Given the ACCC’s findings that key sports content is a critical component of a free to air broadcaster’s overall program offering, the ACCC has pulled the plug on this acquisition.
The ACCC will publish its full public competition assessment in due course so stay tuned.
