ACCC not to oppose acquisitions by Macquarie Media Group

The Australian Competition and Consumer Commission will not intervene in the acquisitions by Macquarie Media Group of Southern Cross Broadcasting and of nine regional radio stations owned by Fairfax, after accepting court enforceable undertakings, ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC closely considered the likely impact of the proposed acquisitions on regional media markets around Australia," he said.

"After identifying preliminary competition concerns in a Statement of Issues on 13 September 2007, further market inquiries and submissions from interested parties led the ACCC to form the view that the acquisitions were likely to result in a substantial lessening of competition in Bundaberg, Port Lincoln, Spencer Gulf, Launceston, Burnie and Devonport.

"In Bundaberg, the ACCC was particularly concerned that the acquisition would lead to MMG owning all of the commercial radio stations. The undertaking accepted by the ACCC requires MMG to divest the 4BU radio station to an independent operator. The ACCC is satisfied that the divestiture will ensure competition in the provision of content and the provision of radio advertising in Bundaberg is not substantially lessened.

"In Port Lincoln and Spencer Gulf, the ACCC considered that the acquisitions, leading to a single owner of all commercial television and radio stations in those regions, would be likely to substantially lessen competition. The undertakings accepted by the ACCC in relation to those areas require MMG to divest both commercial radio stations in each area. The ACCC is satisfied that the divestitures will ensure competition in the provision of content and the provision of advertising in those areas is not substantially lessened.

"In Launceston, Burnie and Devonport, the ACCC was concerned that the acquisition of Southern Cross would lead to a substantial lessening of competition in the supply of advertising opportunities. The undertakings accepted by the ACCC require divestitures of the MMG radio station in Launceston, one of the two commercial radio stations in each of Burnie and Devonport, as well as both commercial radio stations in Queenstown and Scottsdale. The ACCC considers that the divestiture of these stations is likely to ensure that competition for advertising opportunities in Northern Tasmania is not substantially lessened.

"The ACCC was particularly concerned to ensure that the undertakings were structured in such a way that the divested businesses will be viable and competitive. This is one reason why divestments in Queenstown and Scottsdale were required, despite the ACCC not finding a substantial lessening of competition in those areas.

"In all of the regions where divestitures are to occur, the undertakings require an independent manager to be installed to operate the divestiture assets as independent ongoing businesses.

"The ACCC also accepted an undertaking which ensures that Southern Cross Syndication and related assets would be sold to a party independent of MMG in the event that MMG does not on-sell the business to Fairfax as is proposed," Mr Samuel said. "This undertaking addresses the competition concerns that would arise in the event that MMG retained Southern Cross Syndication, despite its intention to on-sell the assets to Fairfax. Southern Cross Syndication is a key source of content for MMG’s competitors, giving rise to the possibility of competition concerns in the relevant radio content markets."

The undertakings will be available on the ACCC's website, under Mergers. A Public Competition Assessment will be issued on the ACCC's website in due course.

Background

Macquarie Media Group is intending to acquire Southern Cross Broadcasting. MMG then intends to on-sell Southern Cross's metropolitan radio assets and other assets (including Southern Cross Syndication) to Fairfax Media. MMG also intends to acquire nine regional radio stations from Fairfax Media.

MMG owns and operates 85 commercial radio licences in 44 licence areas in Queensland, New South Wales, Victoria, Tasmania, South Australia and Western Australia.

Southern Cross Broadcasting owns regional television stations, metropolitan radio stations and other media assets.

Fairfax Media is a publisher of major metropolitan daily newspapers as well as the Australian Financial Review. Fairfax also has substantial online media presence as well as certain other media assets including some regional radio stations (which are being sold to MMG).