Thursday, May 26, 2011

Foxtel acquisition of Austar to have minimal impact on competition

Tim Renowden, analyst - Media & Broadcast Technology, Ovum.

AUSTRALIA: Foxtel’s announcement that it plans to acquire Austar has raised the spectre of reduced competition in the Australian pay-TV market, but in reality the proposed deal would have little impact on competition.

Foxtel and Austar’s customer bases are geographically distinct, meaning pay-TV customers don’t currently get a choice of provider. A merger between the two would therefore make no practical difference to most consumers, and indeed may benefit households in Austar areas who would then be able to access the cheaper Foxtel on Xbox and Foxtel on T-Box services, which are currently off-limits to them.

The sale of Austar’s wireless spectrum in February means that this merger would also have little impact on competition in the Australian telecoms market.

From a commercial and operational perspective, the proposed merger makes a great deal of sense for Foxtel and Austar. Such a move would provide opportunities to streamline subscriber acquisition, marketing and operational costs, and provide a unified national brand and content offering.

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