Embattled News Corp. suffered a fresh setback yesterday when Australian competition regulators said its bid to expand its pay-TV operation in the country raised “significant” monopoly issues.
The news will come as a blow to News Corp. – and its chief Rupert Murdoch – as it struggles to overcome a phone hacking scandal in Britain that has seen it abandon its pay-TV expansion plans in Europe.
Subscription TV service Foxtel – 25 per cent owned by News Corp. – has mounted a $2.7 billion takeover bid for regional cable operator Austar, its major rival, in a move that would expand its base into rural Australia.
But the Australian Competition and Consumer Commission ruled that the merger was “likely to result in a substantial lessening of competition” in the pay-TV, audio-visual content and telecoms markets.
“Foxtel and Austar are the only significant providers of subscription television services in Australia,” the ACCC said in its preliminary issues paper.
“The proposed merger would therefore effectively create a near monopoly subscription television provider across Australia.”
The rollout of Canberra’s ambitious National Broadband Network, a $46 billion project to connect 93 per cent of Australians to superfast internet by 2017, would mean greater opportunities for telcos to compete, it added.
“The proposed acquisition would prevent any such competition from occurring,” it said.
The ACCC plans to hand down its final decision in September, but the issues ruling is a significant blow for Foxtel, the remaining 75 per cent of which is owned by telecoms giant Telstra (50 per cent) and Consolidated Media Holdings (25 per cent).
Consolidated Media Holdings is a joint venture of Kerry Stokes’ Seven television network and Consolidated Press Holdings, run by media and casino magnate James Packer.
News Corp. is in the middle of a firefight in Britain where it has closed its top-selling Sunday tabloid the News of the World over a phone hacking scandal that culminated in Mr Murdoch and his son James being grilled this week by MPs.
It also led the 80-year-old mogul to abandon his bid for British pay TV giant BSkyB, while he is also facing an FBI probe and calls for an inquiry in the United States over allegations his company targeted the phones of 9/11 victims.
But ACCC chairman Graeme Samuel said there was “not the slightest connection of any nature whatsoever” between yesterday’s decision and the storm over the phone hacking row.
Meanwhile, Australia on Thursday moved to introduce a legal right to privacy after the phone-hacking scandal, paving the way for people to sue media organisations for serious breaches.
Laws are already in place in Australia to deal with criminal offences related to privacy abuses but there is no statutory right to sue.
The phone-hacking story has been front-page news and Home Affairs Minister Brendan O’Connor said the government would immediately seek the public’s views on introducing a right to privacy.
“The News of the World scandal and other recent mass breaches of privacy, both at home and abroad, have put the spotlight on whether there should be such a right,” he said.
“Right now... there’s no certainty for anyone wanting to sue for an invasion of their privacy,” said Mr O’Connor, whose government is in a running battle with some Murdoch-owned publications.
The announcement came a day after Prime Minister Julia Gillard warned Mr Murdoch’s Australian arm it faced “hard questions” as calls intensify for a media inquiry following the hacking revelations in Britain.
It followed senior ministers lashing out at Sydney’s Daily Telegraph newspaper, accusing the Murdoch-owned daily of being intent on bringing down Ms Gillard’s Labour-led minority coalition government.
Mr Murdoch controls about two-thirds of Australia’s regional and metropolitan newspapers, has a stake in broadcasters Sky News and Fox Sports, and is angling to run the Australia Network, the international public TV channel.
In a scathing editorial, the mogul’s flagship newspaper Down Under, The Australian, hit back, accusing the government of getting caught up “in the feeding frenzy against News Corporation and our proprietor”.
“The creeping opportunism of this government and its coalition partners, the Greens, in trying to use the cover of the News of the World scandal to put pressure on journalists in Australia is troubling,” it said.
“Brendan O’Connor’s ambit claim for a statutory right of privacy makes an extraordinary leap from the British phone-hacking scandal to Australia, where such practices are unknown in journalism and already illegal.”