News Corporation looks set to strengthen its position in Australia's pay-TV industry after the competition regulator said it would oppose any potential acquisition of Consolidated Media Holdings from Kerry Stokes' Seven Group Holdings.
The Australian Competition and Consumer Commission (ACCC) ruling has cleared the road for News Corp's Australian arm News Ltd to complete its $2 billion takeover of ConsMedia, which owns half of Fox Sports and 25 per cent of Foxtel.
Once completed, News would emerge with 50 per cent ownership of pay-TV provider Foxtel and full ownership of the Fox Sports suite of channels. Telstra holds the other 50 per cent stake in Foxtel.
The transaction also represented Mr Stokes' exit from the pay-TV industry, having bought into ConsMedia in 2009.
Although Seven did not make a bid, in June it asked the ACCC to look into any possible regulatory concerns that could be triggered if it moved to increase its current 24 per cent stake in ConsMedia.
On Thursday, ACCC chairman Rod Sims said there would be a substantial lessening of competition in the market for free-to-air television should Seven be able to buy all the shares in ConsMedia that it did not already own.
"Access to premium sporting content is vital to the ability of free-to-air networks to compete strongly," Mr Sims said in a statement.
"The ACCC considers that the proposed acquisition would significantly reduce the ability of Seven Networks competitors to acquire such content."
The final ruling was expected after the ACCC released a statement of issues in September that indicated any Seven bid would be unlikely to get the green light.
In a statement, Seven said it acknowledged the ACCC's decision and would vote in favour of News Ltd's takeover of ConsMedia.
The directors of ConsMedia, which is majority owned by James Packer's Consolidated Press Holdings, have backed the offer.
The transaction would also further reduce Mr Packer's exposure to the media industry, as the son of the late Kerry Packer turned his attention to his Crown gambling business.
While no longer a shareholder on ConsMedia, Mr Packer still held a 6.5 per cent stake in Ten Network Holdings.
He also retained a tiny interest in Nine Entertainment after he sold the business to private equity firm CVC Asia Pacific.
News Ltd, the Australian arm of Rupert Murdoch's News Corporation, offered $3.45 a share for ConsMedia, as well as a six-cents-per share dividend.
Seven Group closed down nine cents at $6.94, while ConsMedia rose four cents to $3.42.
News Corporation slipped 36 cents to $24.20, while its non-voting scrip declined 38 cents to $23.81.
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