UPDATE: ACCC Flags Concern Over Seven's Bid for Consolidated Media

--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 [e-mail]

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