The Australian Competition and Consumer Commission (ACCC) announced today that it would not intervene to oppose a satellite infrastructure joint venture between Australis Media Limited (AML) and Optus Vision.
AML and Optus Vision have agreed to form a joint venture which will provide management and technical services for satellite distribution of the AML Galaxy package of channels and the Optus Vision package from 1 July 1997.
The joint venture was considered in the context of a deed that was previously entered into between AML and a subsidiary of PBL (the PBL deed) as a result of PBL providing certain funding guarantees as part of AMLs recapitalisation plans.
Under the deed, PBL was granted certain rights of first and last refusal over certain AML programming assets and a right to consent to certain modifications of AMLs programming agreements. Also under the PBL deed, AML was required to use its best endeavours to enter into a joint venture in relation to satellite infrastructure services.
The joint venture and the PBL deed raised a number of issues for consideration because PBL now has interests in two competing pay TV operators.
After careful consideration of the matter, the ACCC decided that there was no reason to intervene. This decision was supported by the advice of senior counsel.
The Commissions decision was on the basis of the information before it. The Commission will closely monitor the implementation of the joint venture.
In announcing that the ACCC would not oppose the joint venture, the Chairman Professor Allan Fels commented that the two satellite pay TV providers would compete in terms of pricing, marketing, and program content. Their independence in this respect is specifically provided for in the terms of the joint venture.
Australis and Optus Vision will be sharing the technical facilities but will not be combining their program offerings he said. One party will not be able to have access to the others subscriber data base, and both parties would continue to compete for satellite pay TV subscribers.
While the joint venture envisages a combined programming package, the ACCC has received explicit written confirmation from both Optus Vision and AML that they will not take any steps to provide to subscribers any combination of programming without first obtaining the approval of the ACCC. Interactive services and near video on demand are excluded from the joint venture.
Under the arrangements, customers will need only one satellite dish and set top box to receive the Galaxy or Optus Vision services, making it easy for subscribers to switch between suppliers.
The arrangements will come into place from 1 July 1997 when restrictions are removed on the provision of satellite pay TV services by parties other than the two current licensed satellite operators (AML and Continental Century).
Professor Fels stated that the joint venture differs in a number of ways from the proposed merger between Australis and Foxtel which was rejected by the Commission earlier this year.
the joint venture is an infrastructure sharing arrangement only;
the joint venture does not lead to the disappearance of one of the three metropolitan pay TV operators;
the joint venture has little or no impact on telephony;
unlike the Foxtel/Australis arrangements, this joint venture will not be implemented until mid 1997 when the market is opened to all potential entrants. The Foxtel/Australis merger would have given the merged group a substantial first mover advantage. It would have been able to access all households via cable, satellite, and MDS while its competitor Optus Vision would have access only to cable distribution until July 1997;
further, the joint venture does not give Optus Vision a greater market penetration than would occur in the absence of the joint venture. Independently of the joint venture, Optus Vision would be able to supply pay TV services via satellite as well as cable; and
a further consequential difference is that the joint venture does not give Optus Vision a significant advantage over Foxtel in securing new programming (unlike the Foxtel/Australis merger).
AML and Optus Vision have agreed to form a joint venture which will provide management and technical services for satellite distribution of the AML Galaxy package of channels and the Optus Vision package from 1 July 1997.
The joint venture was considered in the context of a deed that was previously entered into between AML and a subsidiary of PBL (the PBL deed) as a result of PBL providing certain funding guarantees as part of AMLs recapitalisation plans.
Under the deed, PBL was granted certain rights of first and last refusal over certain AML programming assets and a right to consent to certain modifications of AMLs programming agreements. Also under the PBL deed, AML was required to use its best endeavours to enter into a joint venture in relation to satellite infrastructure services.
The joint venture and the PBL deed raised a number of issues for consideration because PBL now has interests in two competing pay TV operators.
After careful consideration of the matter, the ACCC decided that there was no reason to intervene. This decision was supported by the advice of senior counsel.
The Commissions decision was on the basis of the information before it. The Commission will closely monitor the implementation of the joint venture.
In announcing that the ACCC would not oppose the joint venture, the Chairman Professor Allan Fels commented that the two satellite pay TV providers would compete in terms of pricing, marketing, and program content. Their independence in this respect is specifically provided for in the terms of the joint venture.
Australis and Optus Vision will be sharing the technical facilities but will not be combining their program offerings he said. One party will not be able to have access to the others subscriber data base, and both parties would continue to compete for satellite pay TV subscribers.
While the joint venture envisages a combined programming package, the ACCC has received explicit written confirmation from both Optus Vision and AML that they will not take any steps to provide to subscribers any combination of programming without first obtaining the approval of the ACCC. Interactive services and near video on demand are excluded from the joint venture.
Under the arrangements, customers will need only one satellite dish and set top box to receive the Galaxy or Optus Vision services, making it easy for subscribers to switch between suppliers.
The arrangements will come into place from 1 July 1997 when restrictions are removed on the provision of satellite pay TV services by parties other than the two current licensed satellite operators (AML and Continental Century).
Professor Fels stated that the joint venture differs in a number of ways from the proposed merger between Australis and Foxtel which was rejected by the Commission earlier this year.
the joint venture is an infrastructure sharing arrangement only;
the joint venture does not lead to the disappearance of one of the three metropolitan pay TV operators;
the joint venture has little or no impact on telephony;
unlike the Foxtel/Australis arrangements, this joint venture will not be implemented until mid 1997 when the market is opened to all potential entrants. The Foxtel/Australis merger would have given the merged group a substantial first mover advantage. It would have been able to access all households via cable, satellite, and MDS while its competitor Optus Vision would have access only to cable distribution until July 1997;
further, the joint venture does not give Optus Vision a greater market penetration than would occur in the absence of the joint venture. Independently of the joint venture, Optus Vision would be able to supply pay TV services via satellite as well as cable; and
a further consequential difference is that the joint venture does not give Optus Vision a significant advantage over Foxtel in securing new programming (unlike the Foxtel/Australis merger).