ACCC approves Austar takeover

SUBSCRIBERS of regional pay TV company Austar can rest easy knowing their service will remain in place after the Australian Consumer and Competition Commission signed off on Foxtel's proposed take over of the company.

Foxtel now only needs Federal Court approval for the $2 billion deal to proceed, with a hearing set down for Friday.

 AnAustar spokeswoman said if the Federal Court approved the sale, the transaction would likely be finalised late next month, with expected announcements of increased channels and more content for subscribers.

But the spokeswoman could not indicate whether Austar customers would pay more or less for their subscriptions under the new arrangement. Under current arrangements Foxtel services the major metropolitan cities and Western Australia, while Austar services rural and regional Australia.

Foxtel and Austar share 50:50 ownership of the major subscription TV channels group XYZ Entertainment. When the merger is completed, Foxtel will own 100% of XYZ.

But under the deal, described by Foxtel on Tuesday 10/4 as a "merger", Foxtel will not be able to buy exclusive rights to children's channel Nickelodeon and National Geographic for eight years.

ACCC chairman Rod Sims said the competition regulator was concerned about the national market for retail supply of subscription television services and some regional markets with fixed broadband and telephony products.

"The proposed acquisition would bring together the two main subscription TV industry players in Australia each with a substantial customer base and significant access to key content," Mr Sims said.

"This would in turn give Telstra, Foxtel's largest shareholder, greater market power in regional fixed broadband and telephony markets."

Mr Sims said the deal would also allow Telstra to offer deals to customers which could combine internet, pay TV and telephony access.

Austar shareholders voted in favour of the deal merger on March 30.

Foxtel CEO Richard Freudenstein said the new national subscription service was a "great outcome for consumers".

"We will now be able to create a company of scale that will deliver innovative new digital products and services, and parity for regional and city customers," Mr Freudenstein said.

Until the transaction is completed and integration of the two companies has commenced, Austar will continue to service its customers.

Mr Freudenstein said it was the company's belief the transaction would not "substantially lessen competition in any market.

Shares in Austar rose 35 cents on Tuesday 10/4 on the back of the ACCC announcement, closing at $1.52.

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