Foxtel, Austar merger raises competition uncertainties

The planned nearly AU$2 billion merger between pay television operator Foxtel and its regional counterpart, Austar, is on track to create one of the largest media businesses in Australia.

It has also raised a red flag for competition watchdogs, the Sydney Morning Herald reported today.

The competition regulator the Australian Competition and Consumer Commission has been suspicious in Telstra’s stake in Foxtel, and the impact it has on competition through bundling. Telstra owns 50 percent of Foxtel; James Packer, Kerry Stokes and Rupert Murdoch own the other half.

The proposed deal raises three issues: the first two have to do with “Telstra’s media strategy and its relationship with the other Foxtel shareholders,” The Australian’s James Chessell wrote.

The third “area of uncertainty” is regulation: “Opinion among considered observers is that the deal raises interesting issues for the ACCC to consider … there is plenty of evidence to support the argument a merger of Foxtel and Austar will not significantly reduce competition. But expect the issue to be explored thoroughly by the ACCC.”

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