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CommComm says No to Skodafone

The Commerce Commission has scuppered Sky and Vodafone’s plans for a reverse takeover, putting to bed – for a while at least – the deal that caused considerable angst among other telcos, broadcasters and ISPs.

At the heart of the decision was concern around Sky’s dominance of broadcast rights for sports. The CommComm couldn’t or wouldn’t trust “behavioural undertakings” through which Sky was prepared to offer its programming to other ISPs under the same terms offered to Vodafone.

Last year CommComm observed it was likely to decline the deal, saying that the merger would substantially lessen competition. The Commission then asked for further submissions which, it seems, didn’t address those concerns sufficiently to alleviate the concerns.

The Commission has been unusually specific in its statements, offering a pretty obvious route to the parties (and others contemplating mergers) to a tick from CommComm. Whether or not the conditions, such as removing premium sports from the deal, leaves it sufficiently lucrative and desirable for the parties to try again isn’t clear.

Ahead of the CommComm announcement, Sky’s half year profits were down over 30% on 2016, due to increased programming costs and a subscriber base that’s being wooed away by cheaper online services such as Netflix and the recent;y-launched Amazon. Sky’s share price took a nose dive following the announcement. While Sky’s John Fellett has compared appealing the decision with root canal surgery, there’ve also been noises that the companies might shack up together anyway – just without the legal niceties of a merger.

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