Seven looks to allay ACCC concerns to get media deal over the line
If Kerry Stokes gets the green light for a bid, it will pit him directly against News Corp. Photo: Rob Homer
THE Kerry Stokes-controlled Seven Group says it will attempt to resolve the competition regulator's concerns it would gain an unfair advantage in sport broadcast rights negotiations if it was allowed to acquire a stake in pay TV provider Foxtel.
The Australian Competition and Consumer Commission said yesterday it was delaying its decision on whether to allow Seven to acquire the shares in Consolidated Media Holdings that it does not own.
At stake is CMH's 25 per cent shareholding in pay TV provider Foxtel, and its 50 per cent of Foxtel's lucrative program provider, Fox Sports Australia (FSA). The regulator is seeking more views before a final decision next month, but indicated it was unlikely to approve the plan.
''The ACCC considers that the proposed acquisition has the potential to cause a substantial lessening of competition in the free-to-air (FTA) market by limiting the ability of Seven Network's rival FTA channels to effectively bid for premium sporting rights,'' it said.
''The ACCC is concerned that Seven's acquisition of a 50 per cent interest in FSA as well as the representation on the board of FSA that it would gain as a result of the proposed acquisition, would enable Seven to exercise significant influence over FSA,'' it said. ''The ACCC considers that this would likely result in FSA favouring Seven Network over rival FTA networks.''
The commission said the same applied to any sporting rights acquired by Foxtel.
''We will continue working through the issues with ACCC in an
effort to resolve their concerns,'' said a spokesman for Seven Group, which has a controlling stake in the Seven network.
If Mr Stokes gets the green light for a bid, it will pit him directly against News Corp, which has already received backing for its $2 billion offer from CMH's 50 per cent shareholder, James Packer, in the absence of a higher offer.
Last week, News and Consolidated Media entered into a scheme implementation agreement for News to acquire all of the target's shares at $3.45 each, slightly lower than the $3.50 indicative offer News Corp made before due diligence.
The deal could still be scuttled by Seven, which owns 24 per cent of CMH. Its representatives on CMH's board have yet to support News Corp's bid.
Analysts have said Mr Stokes is more likely to sell to News Corp, or seek concessions from the media giant, rather than gear up with more debt and lob a competing bid.
Another option is for Seven to hold its stake in a privatised CMH, but an analyst told BusinessDay this would not be optimal for anyone involved and expected Stokes to hold out for a slightly higher offer at best.
The ACCC said a final decision on Seven's intended bid was expected by October 11, just three weeks before CMH investors vote to approve a $2 billion offer from News Corp.