News Corp and Australian operator Telstra announced a definitive agreement to combine the Foxtel and Fox Sports Australia pay-TV platforms. As first announced in the preliminary agreement reached last August, News Corp will have a 65 percent stake in the combined entity and Telstra will own 35 percent.
Foxtel is Australia's largest pay-TV provider, delivered over cable, satellite and internet. Owned 50-50 by Telstra and News Corp, it counted 2.774 million subscribers at the end of 2017. Fox Sports Australia is owned by News Corp and offers a range of pay-TV channels and online content.
News Corp will appoint four directors (including the chairman) to the combined entity’s board and the senior executives, and Telstra will appoint two directors. News Corp will consolidate the combined entity into its financial statements. The merger is expected to pave the way for an eventual initial public offering of the new company.
In the most recent fiscal first half to December, Foxtel contributed AUD 22 million in net profit for Telstra. The Australian operator said it expects to book a one-off valuation gain on the deal of AUD 263 million.
The combined company will provide Australian viewers with live streaming products and an expanded library, including Australian written, produced and directed programming. The resulting company will also deliver new products and packages across devices and platforms, with investment in exclusive content and technology, including a focus on high quality Fox Sports Australia productions; expand distribution channels for Foxtel and Fox Sports Australia products, along with developing operating efficiencies across the combined businesses.
The transaction is scheduled for completion in the fiscal fourth quarter to June.
