ACCC told of Foxtel’s plan to buy Ten stake
PAY-TV operator Foxtel has notified the ACCC of its intention to buy a stake in Ten Network.
PAY-TV operator Foxtel has notified the ACCC of its intention to buy a stake in Ten Network in a move that signals that the company is preparing to convince the competition regulator that any issues can be managed.
The news came as Foxtel chief executive Richard Freudenstein revealed that a radical move to slash prices and revamp its channel offering had delivered immediate success.
Last month, the pay-TV operator cut the price of its entry-level cable and satellite offering from $49.50 to $25 a month in a bid to attract new customers.
Foxtel also handed existing customers a range of extra channels and content for free.
At a media event to launch the pay-TV operator’s coverage of V8 Supercars, Mr Freudenstein said: “We’re really bloody pleased about how it’s going. It’s gone better than we expected in terms of sales to new customers.”
And despite having the option of trading down to cheaper packages, Foxtel customers with more expensive platinum packages were opting to retain the price point to take advantage of additional bonus content at no extra cost, Mr Freudenstein said.
He said the move to open up extra channels for existing customers had increased Foxtel’s viewing share of its channels by 1.5 per cent. “As well as getting more customers, our customers are watching more television,” he said.
As V8 Supercars switches broadcasters from previous rights holder the Seven Network to Foxtel and the Ten Network, Fox Sports CEO Patrick Delany revealed a series of enhancements to lift the sport’s profile.
Mr Delaney turned to cult movie star Steve McQueen, famed for his anti-hero persona, for inspiration to give the sport a more “masculine, authentic, colourful and rebellious” image. A new colour palette of orange and pale blue will be led by the tagline: “I am racing”.
For the first time in the sport’s history, every minute of practice, qualifying, support categories and all V8 Supercars Championship races will be shown live and in high definition.
Meanwhile, it is understood lawyers acting for Foxtel contacted the Australian Competition & Consumer Commission in recent weeks over a $590 million joint bid with US cable operator Discovery Communications.
Although ACCC boss Rod Sims has not declared his position, Foxtel may need to offer competition remedies around sports rights after Mr Sims signalled he would revisit a previous ruling. In 2012, Mr Sims prevented media mogul Kerry Stokes taking full control of James Packer’s pay-TV vehicle Consolidated Media.
Shares in Ten yesterday suffered their biggest one-day drop this year, closing down 11.11 per cent, or 2.5c, at 20c, indicating that takeover proposals do not represent a significant premium to current trading levels.
Ten confirmed it had received proposals from a number of parties that could result in either a change of control or a refinancing.
Deutsche Bank analyst Entcho Raykovski said the “most likely offer” was the joint bid by Foxtel and Discovery.
“We can see the rationale behind a Discovery-Foxtel consortium operating Ten, with Discovery obtaining a distribution platform into Australia and Foxtel potentially gaining closer alignment to an FTA network,” he said.
The other bidders are said to include US private investment firms Saban Capital Group and Anchorage Capital Group.
An independent committee is considering the proposals with Ten’s adviser Citigroup. The process could take up to two weeks.
According to sources, none of the non-binding proposals went above 25c a share as Citigroup received proposals just before a midnight deadline on Tuesday. The offers value Ten at between $510m and $664m.
Foxtel is 50 per cent-owned by News Corp, publisher of The Australian, with Telstra owning the other 50 per cent.