News Limited bids for Consolidated Media in Australia

By
David Scott

July 02, 2012

News Limited, Australian arm of global parent News Corporation, has put a conditional proposal to Australian media investment company Consolidated Media Holdings (CMH) to acquire 100 per cent of CMH at a cost of nearly A$2bn ($2bn). CMH, formerly Publishing and Broadcasting Limited, owns a 50 per cent share in Fox Sports Australia and a 25 per cent share in Australia’s leading pay television operator Foxtel.

Conditions of the proposal include the Board of CMH recommending the transaction to its shareholders, completion of due diligence and Board approval by News Corporation and regulatory approval from the Foreign Investment Review Board and Australian Competition and Consumer Commission.

News Limited will significantly increase its ownership in the Australian pay television market should the transaction proceed. Acquisition would double News Limited’s stakes in Fox Sports Australia and Foxtel, to 100 per cent and 50 per cent respectively. News Limited already owns 50 per cent of Fox Sports Australia alongside CMH and a 25 per cent stake in Foxtel. Australian incumbent telco Telstra owns the remaining 50 per cent share in Foxtel.

The acquisition therefore strengthens News Limited’s position in the pay television market in Australia, particularly around the provision of sports content. Fox Sports Australia, which changed its name from Premier Media Group in February 2012 to better reflect the core business of the company in its name, owns and operates the Fox Sports group of pay television channels in Australia. However, News Limited will still face intense competition for sports audiences from Australian free-to-air television broadcasters due to anti-siphoning laws in Australia. Australia’s anti-siphoning laws regulate media companies’ access to significant sporting events. Under the scheme, priority is given to the country’s free-to-air television broadcasters to acquire the rights to high profile sporting events such as the Olympic Games, Australian Football League (AFL) and National Rugby League (NRL) Grand Finals and the Australian Open Tennis.

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