Foxtel and Austar have now agreed on the terms that will see the metropolitan pay television provider acquire the regional pay television provider in a deal worth approximately AU$2 billion, or $1.52 in cash per share.
The price set by this new transaction agreement represents a 54% premium on the closing price on February 17, which was around 99 cents per share (the date is the day prior its shares sky rocketed in reports of a merger between the two companies). The deal has received the board’s approval and is now up to the shareholders to vote on the merger.
It also needs approval from the Australian Competition and Consumer Commission and Foreign Investment Review Board before the merger can actually take place.
The merger between the two pay television providers will see one company handling both regional and metropolitan services – and hopefully end the discrepancy between channel launches. For example, metropolitan viewers via Foxtel were able to watch a slew of new channels it added to its platform after the launch of a new satellite before Austar viewers could see them. In addition, Al Jazeera English and CCTV News (the international channel from the Chinese state-run broadcaster) airs on Austar and not Foxtel.
But the above is for consumers. Business wise, it would see Foxtel add more than $2.8 billion in revenue while also having a “combined investment in original Australian content of more than $500 million per annum”. The latter could refer to both parties having ownership several channels together – such as Nickelodeon and Channel V.
Either way, it does also mean that Foxtel now has a greater share of the pay television market – and possibly a near monopoly. But with digital television and now IPTV services – which Foxtel has started to do via the Xbox 360 – should Foxtel be allowed to own Austar?