Race is on to stop News Corp running a sports rights monolopy

Ten takeover by Lachlan Murdoch and Bruce Gordon gets ACCC green light

The competition watchdog has announced that it will not oppose a proposed bid for the Ten Network by current shareholders Bruce Gordon and Lachlan Murdoch.

Mr Gordon, through his private company Birketu, and Lachlan Murdoch, through his investment vehicle Illyria, have proposed to jointly buy out Ten, taking a 50 per cent share each.

Birketu currently owns about 15 per cent of Ten's shares, while Illyria owns 7.44 per cent.

The Australian Competition and Consumer Commission (ACCC) said it does not believe allowing the two men to completely take control of the network would substantially lessen competition in any particular media market.

That is despite ACCC chairman Rod Sim's acknowledgement that it would lessen "competition via a greater alignment of Mr Murdoch's, Mr Gordon's and Ten's interests."

The ACCC's relative ambivalence towards the deal is partly because Mr Gordon's WIN TV and Ten are broadcast within different geographic areas — the former is regional and the latter in large metro markets.

However, the ACCC also addressed the issue of Lachlan Murdoch's involvement, given his position as co-chairman of News Corporation and executive chairman of 21st Century Fox, as well as his range of other media interests.

"We considered whether the acquisition would significantly reduce competition, by causing a reduction in the quality and range of news content, or increasing the negotiation power of the combined Ten/Foxtel/News Corporation," the ACCC's chairman Rod Sims said in a statement.

"On the issue of the effect on competition in the supply of news services, the ACCC took into consideration competition from news providers on other media platforms and in particular, the other free-to-air networks, given Seven and Nine have a stronger position in the market than Ten.

"The ACCC also considered the effect on competition in the acquisition of sports rights and other types of content.

"The parties will continue to face competition from the remaining free-to-air networks as well as streaming services for the acquisition of content."
Regulator 'not oblivious' to Murdoch influence

Other factors considered by the ACCC included Ten and Foxtel's existing joint venture to sell advertising on the networks, MCN.

The regulator also considered the Murdoch family's large and growing dominance of the Australian media landscape.

"The ACCC is not oblivious to the fact that significant influence can be exerted through partial shareholdings and family connections, however the ACCC did take into consideration that this is a proposed 50 per cent acquisition by Illyria," Mr Sims said.

"Even though incentives to compete may be weakened if the proposed acquisition proceeds, Ten and Foxtel/News Corporation will remain competitors in a number of markets and will be subject to our competition laws which prevent them from making anti-competitive agreements."

In the end, the ACCC said the language of its legislation sets a fairly high bar to reject mergers and acquisitions, but it also hinted that any further concentration in Australian media would face even tougher scrutiny.

"While this transaction will result in some reduction in diversity across the Australian media landscape, we have concluded it would not substantially lessen competition, which is the test the ACCC is required to assess acquisitions against," said Mr Sims.

"The Australian media market is becoming increasingly concentrated and we will continue to closely examine future media mergers in light of the impact any future loss of competition may have on both choice and quality of news and content produced for Australian audiences."
While the proposed takeover has the ACCC's green light, it will still need a change in media ownership laws, which currently prevent the transaction taking place.

Before Mr Murdoch and Mr Gordon can legally takeover Ten, certain media ownership laws will first need to be changed.

The first law, being the "two out of three rule", prevents an individual or a company owning a newspaper, TV station and radio station in the same licence area.

Mr Murdoch currently owns radio and newspaper assets in markets where Ten gets broadcast.

While Ten's latest problems are contemporary, the network has faced many hurdles during its lifespan of little over 50 years.

If he were to take control of Ten, Mr Murdoch would then control all three forms of media - therefore breaching the "two-out-of-three rule".

As for the "reach rule", it prohibits a single TV broadcaster from reaching more than 75 per cent of the population.

This rule is a problem for Mr Gordon as he owns WIN Television, which broadcasts in regional areas.

If Mr Gordon were to control Ten, his reach would extend to metropolitan areas which would put him in breach of the "reach rule".

The Turnbull Government is seeking to overturn these rules with its media law reform bill, but it is currently stalled in the Senate, opposed by Labor, The Greens and much of the crossbench.

The Government recently appeared to make some progress towards getting its media laws through the Senate, striking a deal with One Nation, but this deal antagonised a number of the other crossbenchers.

As a temporary measure, the Government waived broadcasting licence fees for commercial free-to-air television and radio broadcasters last financial year.

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