Enlarged Foxtel to go “national” as $2bn acquisition of Austar gets green light.
Foxtel say its new mammoth Pay TV “national service” will deliver parity on digital viewing between city and regional consumers after the ACCC accepted a set of undertakings offered by the company to facilitate the proposed merger with regional player Austar.
“Foxtel and Austar will join forces to create a national subscription television service for all consumers,” Foxtel confirmed in a statement.
The $2bn transaction is still subject to final Federal Court approval set for 13 April, however.
Foxtel’s CEO Richard Freudenstein says the deal is “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.”
“The new national Foxtel will be one of Australia’s most progressive and dynamic media companies” and will spend close to $600 million on new Aussie content a year.
“Combining Foxtel and Austar will give us the scale to keep investing and innovating in both content and technology for consumers across Australia in an increasingly competitive market,” Mr Freudenstein said.
Foxtel services the major metropolitan cities and Western Australia, while Austar, headed by CEO John Porter, services rural and regional Australia.
Foxtel will also have full ownership of subscription TV group XYZ Entertainment, owner of Lifestyle channels including LifeStyle You, V Channel and Arena, Discovery Channel, once the merger is completed, it confirmed.
Currently, Austar owns 50% of XYZ with Foxtel owning the remaining 50%.
The consumer watchdog, ACCC, has also demanded the company agree to a series of under takings that prevent Foxtel from buying exclusive internet protocol television (IPTV) rights for a range of TV shows and movies.
Foxtel also is banned from exclusively buying any movies delivered on a transactional video-on-demand basis.
The pay TV giant also is prevented from buying exclusive mobile rights to TV shows and movies where the rights are sought by its competitors to combine with IPTV rights.
“The $2bn merger will benefit the 2.2 million subscriber households and over 6 million viewers of our combined platforms, as well as potential consumers,” said Freudenstein.
Telstra, which owns a 50% stake in Foxtel, said it welcomes today decision for the Pay TV giant buy regional player Austar, which will see it own 97% of the subscription market.
And its not just Foxtel owners News Limited, Telstra and Consolidated Media Group that should be jumping for joy- its also a “win win ” for T Box and Austar users access to content, says Telstra Digital Media boss.
“The merger between FOXTEL and AUSTAR will create a pay TV company that will be able to provide innovative content for customers across Australia,” Rick Ellis, Group Managing Director Telstra said today.
The deal will enable “Telstra to expand its Foxtel on T-Box offering into some Austar areas over time, enabling regional Australians in those areas to enjoy the same high quality IPTV services as those who live in metropolitan areas.”
Telstra said it will provide further detail on its plans to expand the availability of FOXTEL on T-Box at a later date.
Until the transaction is completed Foxtel will continue to service to its customers and Austar will continue to service its customer base.
Foxtel boss also insists the Austar deal does not substantially lessen competition in any market, saying “we are pleased that the ACCC has today accepted the undertakings which we have provided to expedite completion of the transaction.”