Thursday 23 February 2017 08:48 AM
FIRST CUT: ComCom declines Sky TV/Vodafone merger over competition fears
Feb. 23 (BusinessDesk) - The Commerce Commission has rejected an application by Sky Network Television and Vodafone New Zealand to merge their businesses over fears it would stifle competition, with a key factor being its ownership of premium sports content.
The commission wasn't satisfied the deal would not be likely to substantially lessen competition in any market in New Zealand. Since issuing a letter of unresolved issues last October highlighting its concerns, subsequent submissions hadn't allayed those fears and the commission has "not been able to exclude the real chance that the merger would substantially lessen competition," it said in a statement.
The key issue was the merged entity's ownership of premium sports, such as New Zealand's rugby broadcast rights.
Sky and Vodafone want to create the country's largest telecommunications and media group, with Sky TV buying Vodafone NZ for $3.44 billion, funded by a payment of $1.25 billion in cash and the issue of new Sky TV shares at a price of $5.40 per share. Vodafone would have become a 51 percent majority shareholder in Sky TV, in what amounted to a reverse takeover. The pay-TV operator planned to borrow $1.8 billion from Vodafone to fund the purchase, repay existing debt and use for working capital.