Foxtel, Fox Sports to create superpower
NEWS Corp and Telstra have signed definitive agreements to combine Foxtel and Fox Sports.
The move effectively clears the final hurdle to the combination of Australia’s biggest pay-TV broadcaster with the country’s leading sports programmer.
After months of talks, shareholders on both sides reached an agreement ahead of schedule, paving the way for the formation of a sports and entertainment player with combined annual revenues of more than $3 billion.
Key terms include News Corp holding a 65 per cent shareholding in the combined entity, with Telstra owning the remaining 35 per cent.
Telstra and News Corp are currently joint shareholders in Foxtel, while Fox Sports is wholly owned by News.
News Corp, which will consolidate the combined entity into its financial statements, will appoint four directors including the chairman to the company’s board and the senior executives, and Telstra will appoint two directors.
Former Fox Sports chief Patrick Delany was installed as the combined company’s new chief executive earlier this year.
The transaction is expected to close during the fourth quarter of 2018 financial year.
“The launch of the combined company will mark the dawn of a new era for our Australian business, and Foxtel and Fox Sports Australia will together be a formidable force,” said News Corp chief Robert Thomson.
“We will be able to use our powerful media platforms to promote the unique sports and entertainment assets in the two companies, and improve services for consumers and advertisers.”
The deal has already gained approval from the Foreign Investment Review Board and the competition regulator.
Telstra chief Andy Penn said: “Our customers are streaming more and more sport and entertainment on their TV at home and on their mobile devices while on the move”.
“Telstra will be the exclusive telco sales agent for the combined entity on mobile and IP products and we will continue with our broadcast reseller arrangements,” Mr Penn said.
The deal represents one of News Corp’s biggest strategic moves since Rupert Murdoch split his media empire in 2013, with the global entertainment assets going to 21st Century Fox and the publishing assets, including the Gold Coast Bulletin, going to News Corp.
News and Telstra believe a merger of Foxtel and Fox Sports will enable the enlarged entity to build a valuable content business for the longer term and provide greater differentiation in the market as well as wider monetisation opportunities.
News Corp’s Australianlisted voting shares jumped 2.2 per cent, or 45c, yesterday to $21.12. Telstra shares were up 2.1 per cent, or 7c, at $3.37.