A $2-billion takeover bid by an Australian pay-TV business part-owned by his News Corp is expected to be blocked by the country's competition watchdog.
In a further blow to Rupert Murdoch, a $2-billion takeover bid by an Australian pay-TV business part-owned by his News Corp is expected to be blocked by the country's competition watchdog.
The bid by Foxtel, in which News Corp has a 25 per cent stake, for rival Austar will create a pay-TV monopoly, the Australian Competition and Consumer Commission (ACCC) said. Austar shares plunged as much as 20 per cent.
The commission insisted its preliminary finding had nothing to do with the phone hacking scandal engulfing News Corp in Britain, which prompted Murdoch to abandon a separate pay-TV deal to fully take over British firm BSkyB.
"It has nothing to do with it all, not even a consideration," Graeme Samuel, the commission's chairman, said.
Analysts warned that the commission's final decision due in September was likely to reflect its preliminary views, thus killing the deal.
"It is hard to see what kind of remedies Foxtel and Austar can provide to alleviate the concerns of the ACCC, without undermining the value of the deal," said Justin Diddams, an analyst at Citi.
Murdoch's major shareholder partners in Foxtel include telecoms firm Telstra and billionaire James Packer's Consolidated Media Holdings.
Foxtel launched a bid in May to buy Austar, which is majority owned by Liberty Global.
The deal is small for News Corp, a media group that reported third-quarter net income of $639 million and revenues of $8.26 billion.
But Austar shares had slipped earlier in the week on concerns the fallout from the phone hacking scandal that has undermined confidence in Britain's media, its politicians and the police may affect Foxtel's bid because News Corp was a major shareholder.
Austar shares slumped as much as 20 per cent after the commission's comments, wiping A$330 million ($358 million) off its market value. They closed down 16 per cent at A$1.085, compared with Foxtel's A$1.52 per share bid. News Corp shares dropped 1.8 per cent.
Even though the Austar deal may be closed off to Foxtel, the Australian government has decided to reopen a bitterly fought tender involving Murdoch's part-owned Sky news for the country's taxpayer-funded overseas TV service.
The Austar deal, finalised after years of talks, would have marked the latest shake-up for Australia's media sector as the pay-TV operator sought to revive flagging subscriptions and take on the nation's free-to-air television stations.
"It does open the door for a competing bid, if anyone out there was thinking of getting into the Australia market, with Foxtel's hands now tied," said a fund manager, who declined to be named. He pointed to telecoms firm Optus, owned by Singapore Telecommunications, and iiNet as potential suitors.
Both Austar and Foxtel said they would work with the competition regulator to try to save the bid to form one of Australia's largest media businesses with more than 2,500 employees and anticipated revenue of more than $2.8 billion.
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