MELBOURNE Australia's largest pay-TV firm Foxtel extended its dominance on Tuesday when the competition watchdog cleared its $2 billion takeover of smaller regional rival Austar United Communications AUN.AX, nearly a year after the deal was first proposed.
The Australian Competition and Consumer Commission (ACCC) had voiced concerns the merger would destroy pay-TV competition by merging the two main providers, Austar and Foxtel, which is owned by Telstra Corp (TLS.AX), Rupert Murdoch's News Corp (NWSA.O) and James Packer's Consolidated Media Holdings CMJ.AX.
The commission said in a statement it imposed several conditions on the takeover, adding the deal would give largest shareholder Telstra greater market power in regional areas.
The conditions include that Foxtel would be prevented from buying exclusive internet TV rights for a range of television and movie content, including Nickelodeon and National Geographic channels.
"By reducing content exclusivity, the undertakings will lower barriers to entry and promote new and effective competition in metropolitan and regional telecommunications and subscription television markets," ACCC Chairman Rod Sims said in a statement.
The conditions also prevent Foxtel from acquiring exclusive mobile rights to specified content where competitors also want to deliver the programming across mobile devices.
Foxtel had promised not to enter into any exclusive content agreements to buy internet TV rights, leaving the door open to more competition through online TV. [ID:nL4E8E67NQ]
Investors have been expecting the deal to win clearance, with Austar shares last trading at A$1.48, just below the A$1.52 per share offer price made in May last year. The watchdog issued its first comments on the deal last July.
Austar shareholders voted overwhelmingly last month to approve the deal and the ACCC nod was the last major hurdle for the deal.
The final step will be a Federal Court hearing scheduled for Friday.
(Reporting by Victoria Thieberger; Editing by John Mair and Paul Tait)