Rupert Murdoch’s move to buy almost 18 per cent of FTA TV broadcaster, ITV, is heading for an inquiry in the UK because the regulators there (and not the lapdogs and spineless politicians we have here) are worried.

British newspapers reported at the weekend that Office of Fair Trading had “significant competition concerns” over last year’s purchase of an 18 per cent stake in ITV by BSkyB, which is 38 per cent owned by News Corp and run by James Murdoch.

Murdoch bought the ITV shares for $2.3 billion in November to prevent a merger with Sir Richard Branson’s Virgin media group, which is also Pay TV operator.

The British Government has until May 26 to decide whether to refer the broadcaster to the Competition Commission.

As well as the Office of Fair Trading, media watchdog Ofcom, has also expressed concern to the Government, claiming the BSkyB swoop on ITV has unfairly distorted the British media market.

Both regulators have reportedly told British trade secretary Alistair Darling that the satellite broadcaster’s acquisition of a 17.9% stake in ITV raises significant competition concerns.

British commentators point out that the Government can ignore the Ofcom reference but not the one from the Office of Fair Trading which has the ability to make its own reference to the Competition Commission (which is a more activist version of our ACCC).

While Murdoch’s play was potentially limiting, some commentators are asking what the difference would be to the planned merger between ITV and Virgin except that the latter deal would have seen two relatively weak commercial broadcasters merging to provide a stronger opponent to Murdoch and the BBC. But it still would have involved a Pay TV business and a FTA broadcaster merging.

But at least the UK might have an inquiry. We have had the competition limiting ownership by PBL of the Nine Network and 25% of the Foxtel pay TV business and half of the Premier Media Group.

The Howard Government’s new media legislation smiles on this structure, allowed by the government in 1998, and allows even greater concentration and loss of “plurality” to use the British phrase on what we call diversity.

In fact the British situation wouldn’t merit a reference here, despite what Graeme Samuel at the ACCC might say, because Pay TV isn’t covered by the new media legislation of the Howard Government and it would be quite easy to prove that the industry is a defined market, competing for advertising revenue with FTA TV, magazines, newspapers, outdoor and the internet.

It’s why News and PBL are poised to tightening their grip on the fastest growing area of the media (excluding the internet) by engineering a merger between Foxtel and regional competitor, Austar.

Even if the likes of the Seven Network trumps an offer (which is unlikely given the closeness between Austar, Foxtel and News and PBL) from Foxtel, it is merely another version of what the Poms are worried about with ITV and BSkyB.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey