--Australian regulator fears takeover may hurt competition
--ACCC invites more comment
(Adds Seven Group spokesman comment in fourth paragraph, analyst
comment from eighth)
By Gavin Lower
MELBOURNE--Australia's competition watchdog said it has doubts
over Seven Group Holdings Ltd.'s (SVW.AU) proposal to take over
media-investment company Consolidated Media Holdings Ltd.
(CMJ.AU).
The specific concern relates to dominance over
sports-broadcasting rights, given Seven Group's links with the
Seven Network, Australia's most popular television broadcaster, the
Australian Competition & Consumer Commission said in a
statement Thursday.
"We will continue working through the issues with ACCC in an
effort to resolve their concerns," said a spokesman for Seven Group
in an emailed statement.
Consolidated Media, which owns 25% of Australia's largest pay-TV
broadcaster Foxtel and 50% of sports-channel Fox Sports, has
received a separate 1.94 billion Australian dollar (US$2.03
billion) bid from News Corp. (NWS), owner of this newswire.
The ACCC has already said it wouldn't oppose News Corp.'s bid,
which has the support of casino billionaire James Packer, executive
chairman of Consolidated Media's largest shareholder, Consolidated
Press Holdings.
Seven Group's proposal to take over Consolidated Media has been
seen by analysts as a tactic to either extract a sweetened bid from
News Corp. or deliver a deal on sports-broadcasting rights.
Seven Group, which is controlled by billionaire Kerry Stokes,
owns 25% of Consolidated Media and had asked the ACCC to consider
its own proposal to acquire the rest of the company's shares. Seven
Group also has 33% of Seven West Media Ltd. (SWM.AU), which owns
Seven Network.
Fraser McLeish, a media analyst at RBS, said the ACCC's concerns
confirmed that it had issues with any combination of pay television
with free-to-air television, which made a possible bid by Seven
Group for Consolidated Media less likely.
"There's a risk Seven says, 'I'll hang onto the stake in pay
television' and then News has got to figure out whether that's
acceptable or not," he said.
News Corp. owns 25% of Foxtel and 50% of Fox Sports, while
Telstra Corp. (TLS.AU), Australia's biggest telephone company, owns
the remaining 50% of Foxtel.
The ACCC said its concerns related specifically to the
free-to-air television market, and in particular "the influence
Channel Seven may be able to exert over Fox Sports Australia in
joint bids and other commercial arrangements in relation to sports
rights."
It said it was concerned that if Seven gained 50% of Fox Sports,
that channel would favor partnering with the Seven Network when
bidding for valuable sports-broadcasting rights to the detriment of
other free-to-air televisions broadcasters, such as the Nine
Entertainment Co.-owned Nine Network, and Ten Network Holdings
Ltd.'s (TEN.AU) Ten Network.
The ACCC invited further submissions from interested parties on
Seven Group's proposal and deferred its decision until Oct. 11.
Write to Gavin Lower at gavin.lower@wsj.com
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