Seven Group seeks to allay competition concerns over Foxtel stake

The Kerry Stokes-controlled Seven Group said it would attempt to resolve the competition regulator's concerns that the group would gain an unfair advantage in sport broadcast rights negotiations if it was allowed to acquire a stake in pay TV provider Foxtel.

According to the Australian Competition and Consumer Commission, it was delaying its decision on whether to allow Seven to acquire the shares in Consolidated Media Holdings (CMH) that it does not own.

At stake is CMH's 25 per cent shareholding in pay TV provider Foxtel, as also 50 per cent of Foxtel's lucrative programme provider Fox Sports Australia (FSA). The regulator has called for more views before next month's final decision, but indicated it was not disposed to approve the plan.

According to the ACCC, it was of the view that the proposed acquisition could potentially lead to a substantial lessening of competition in the free-to-air (FTA) market by limiting the ability of Seven Network's rival FTA channels to effectively bid for premium sporting rights.

If Stokes' bid were to get the green light, he would be pitched against News Corp, which had already received backing for its $2 billion offer from CMH's 50 per cent shareholder, James Packer, in the absence of a higher offer.

Stokes is known to be a shrewd trader, and a man who would not let an opportunity to further his interests go. At present, he enjoys leverage over Rupert Murdoch's News Ltd and James Packer, but it is considerably less this week after the competition regulator clarified its stance.

Seven Group needs control over another 25 per cent of Foxtel as also the 50 per cent of Fox Sports it does not own. Packer, who is in need of money to expand his casino business, is willing to accept Murdoch's offer for acquisition of pay TV assets that belong to Consolidated Media, in which he has a 50 per cent holding.

However, Stokes has enough shares in ConsMedia to block this deal and foil the plans of both Murdoch and Packer. However, he would need to work out a way, which provides him with some gain rather than losing out in the process, say analysts as they point out that would not be easy for Stokes to increase his interest in pay television.