CELEX: 31996M0826
Language: en
Date: 1996-11-11 00:00:00
Title: Commission Decision of 11/11/1996 declaring a concentration to be compatible with the common market (Case No IV/M.826 - ESPN / STAR) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0826

Commission Decision of 11/11/1996 declaring a concentration to be compatible with the common market (Case No IV/M.826 - ESPN / STAR) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 368 , 06/12/1996 P. 0008

  COMMISSION DECISION of 11/11/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.826 - ESPN / STAR)  according to Council Regulation (EEC) No 4064/89   (Only the English text is authentic)  The paper version of the decision is available through the sales offices  of the Office of Official Publications of the European Communities.  Brussels, 11.11.1996  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties  Dear Sirs,  Subject:<ind> Case No.IV/M.826  ESPN/STAR  <ind> <ind> Notification of 09.10.96 pursuant to Article 4 of Council  Regulation (EEC) No.4064/89  1.<ind> On 09101996, the Commission received a notification of a proposed  concentration by which ESPN, Inc.(ESPN) and Star Television Limited (Star)  intend to create a joint venture  NEWCO   to which the Parties will  contribute their nonstandard television delivered sports businesses in  several Asian countries (the Territory).  <ind> Nonstandard television includes all forms of television  distribution, other than free, terrestrial UHF or VHF television. Thus it  includes cable, microwave, satellite dish services, and any form of  encrypted service, including encrypted terrestrial UHF or VHF television.  2. <ind> After examination of the notification, the Commission has  concluded that the notified operation falls within the scope of the  application of Council Regulation No.4064/89 and does not raise serious  doubts as to its compatibility with the common market and with the  functioning of the EEA agreement.  I. THE PARTIES  3. <ind> ESPN is a Delaware corporation, which is an 80% subsidiary of  Capital Cities/ABC, Inc. which, in turn, is whollyowned by The Walt Disney  Company. ESPN operates a number of 24 hour sports television networks  which it distributes to all forms of nonstandard television distributors  and users, primarily in the United States (its principal sales area),  Latin America and Asia. All ESPN's Asian services are encrypted. ESPN also  licenses sports programming to nonstandard television distributors in  which it has a minority interest in Australia, Brazil, Canada, Japan and  Europe (where the relevant distributor is Eurosport). In addition, ESPN  syndicates sports programming to unrelated third parties, principally in  Europe. A subsidiary of ESPN, ESPN Enterprises, Inc. conducts ancillary  activities such as electronic publishing, development of interactive  sportsrelated software, pay per view, and video sales.  <ind> The activities of The Walt Disney Company are diverse and include  the production and distribution of filmed entertainment, the operation of  theme parks, the sale and licensing of consumer products and the operation  of TV broadcasting networks.  4. <ind> Star incorporated in the British Virgin Islands, is a member of a  group whose ultimate parent is The News Corporation Limited. Star operates  several nonstandard television networks in Asia, including a sports  service, movie service and general entertainment service. These services  are both encrypted and nonencrypted, depending on the regional focus.  <ind> The News Corporation Limited has diversified interests in the media  sector including film production and distribution, book and newspaper  publishing, and the operation of terrestrial and satellite television  networks.  II. CONCENTRATION      Joint Control  5. <ind> Each Party will have 50% interest in NEWCO and which, after  initial adjustment, will be equally funded by the Parties. The key  business, strategic and budgetary decisions will require the approval of  both parties. This includes approval of, or amendment to, each annual  operating and capital budget and the hiring of the Managing Director. It  follows from the above that ESPN and Star will exercise joint control  within the meaning of Regulation 4064/89.     Full function  6. <ind> The JV has all the assets necessary to perform on a lasting basis  all the functions of an autonomous economic entity engaged in the  distribution of sports programming via nonstandard television in the Asian  countries involved.  <ind> The Parties will contribute or license all the assets of their Asian  nonstandard sports television distribution businesses  including equity in  the subsidiaries through which they conduct their Asian business,  programming rights, distribution agreements, production, transmission and  encryption facilities, transponders, decoders and employees and all other  assets used to conduct these businesses  to NEWCO. After an initial period  of six to 14 months during which Star will provide technical services to  NEWCO under the terms of a Channel Services Agreement to be concluded  between the Parties, the Parties' intention is that Star's technical  equipment currently dedicated to sports programming and distribution will  be relocated to a single NEWCO facility in Singapore. Each party commits  itself to fund, if necessary, NEWCO's operations for a maximum period of  [Deleted business secret] or a maximum amount of US$ [...] which ever  occurs first. This does not prejudice the full function nature of JV given  that the business have been loss making for the parents themselves. NEWCO  is intended to remain, at least, until June 30, 2095.     Absence of coordination  7. <ind> The Parties submit that the joint venture will not give rise to  coordination between the parents and no geographical overlap exists.  <ind> Distribution of sports programming  Following the transfer of their  activities, both Parties will withdraw from the direct distribution of  sports programming by means of nonstandard television within the  Territory.   <ind> Acquisition of Asian rights to Asianinterest sports programming    ESPN and Star are not formally prohibited from bidding for Asian rights to  Asianinterest sports programming. However, this is only likely in the  exceptional circumstances where Asian and nonAsian rights for sports  events are sold in bundled form.  <ind> In any event, such coordination would be irrelevant for the purposes  of EC competition policy since it would only arise outside EEA market.  III. COMMUNITY DIMENSION  8. <ind> The combined aggregate turnover of the Parties exceeded the   worldwide and ECwide thresholds specified in Regulation 4064/89 of ECU 5  billion (Disney: ECU 9,438.9 million/ News Corp: 7,675.3 million) and ECU  250 million (Disney: ECU [...] / News Corp: ECU 1,369 million)  respectively. The Parties do not generate more than two thirds of their  aggregate community wide turnover in one and the same Member State. The  operation therefore has a Community dimension.  IV. COMPATIBILITY WITH THE COMMON MARKET      Relevant Product Market   9. <ind> The operation concerns the distribution of Asianinterest sports  programming via nonstandard television in several Asian countries and the  acquisition of rights to distribute Asianinterest sports programming.  NEWCO will initially provide both encrypted and non encrypted services,  although it is anticipated that ultimately all of JV's services will be  encrypted.  10. <ind> In view of the fact that the main impact of all transaction is  outside of EC/EEA market, for the purpose of this case the exact  definition of the relevant product market can be left open since the  concentration is not likely to raise serious doubts as to its  compatibility within the EEA market.      Relevant Geographic market   11. <ind> NEWCO will distribute principally Asianinterest sports  programming via nonstandard television in 27 Asian countries and will  acquire rights to distribute such programming. Concerning the European  market only one of the Parties has sales within, so no geographical  overlap exists. Given the insignificant impact of the merger in the EC/EEA  market, the exact definition of the relevant geographic market can be left  open because the concentration will not lead to the creation or  strengthening of a dominant position.     Assessment  12.<ind> No assets of any value in the EEA are being transferred to NEWCO  and only  the ESPN, has sales in Europe. In fact, in 1995, Star made no  sales in the EEA and ESPN estimates that its syndicated sales of Asian  sports programming in Europe amounted to less then US$[...]. As the  primary objective of the NEWCO is to operate in Asian countries and not in  EEA, it is unlikely that JV will have any significant sales in Europe. In  addition, any effects of the JV on sellers of Asianinterest programming  rights located in the EU/EEA would not involve any effect on trade within  since such programming would be purchased only for distribution outside  the EU/EEA. Consequently it is not considered that the concentration  creates or strengthens a dominant position in the common market.  V. CONCLUSION  13. <ind> It follows from the above that the proposed concentration would  not create or strengthen a dominant position as a result of which  competition would be significantly impeded in the common market or in a  substantial part of it.  14. <ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with the common market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No 4064/89.  For the Commission