Mediaweek

News

Foxtel and Fox Sports to merge into sport & entertainment company

News Corp reveals it will control 65% of merged Foxtel and Fox Sports

Telstra and News Corp have announced their intention to combine Foxtel and Fox Sports Australia into a new company.

The partners said the move to combine the companies will align ownership and management for success at a time when more Australians are consuming premium content across more technologies and platforms than ever before.

There have been a number of recent moves that point to closer cooperation between the two including the move of Fox Sports News into Sky News and the move to Fox Sports of Peter Campbell, a former director of sport and Olympic Games at Foxtel, and more recently general manager of AFL Media.

Subject to the conclusion of definitive agreements, regulatory review and satisfaction of certain other conditions, the following key changes will be implemented as part of the new arrangement:

• News Corp will have 65% shareholding in the new company and Telstra will have 35%
• News Corp will appoint the chairman, majority of the new company’s board and senior executives and Telstra will appoint the remaining directors

The new company has announced it will be positioned to meet the needs of Australian viewers and create greater choice than ever before by:

• Investing in Australian written, produced and directed programming
• Delivering a wider range of new and innovative products and packages across devices and platforms
• Continuing to invest in premium content and technology to meet growing consumer demand
• Expanding distribution channels for the sale of Foxtel and Fox Sports products, and developing greater operating efficiencies across the combined businesses, including distribution
• The proposed arrangements will better position the new company for an initial public offering in the future, with News Corp having a majority stake.

If the transaction between Telstra and News Corp is concluded on the proposed terms, News Corp expects to consolidate the new company into its financial statements.

Telstra CEO Andy Penn (pictured L) said the transaction would provide the new company with a strong platform to flexibly respond to significant changes in the media, communications and content markets.

“Our strategically significant investment in the new company will be an important part of Telstra’s media strategy,” Penn said.

“Under this arrangement Telstra will continue to support the company with our broadcast reseller arrangements, which is a major strategic component for us.

“More people are watching more media on more devices for more hours every day of the week, so the demand for media and for content is only going to grow. With a strong premium content proposition and scale subscriber base, the new company will be well positioned to deliver a compelling customer experience.”

News Corp chief executive Robert Thomson (pictured R) said, “The proposed restructuring of Foxtel and Fox Sports will unlock value for News Corp shareholders and provide a clearer vision into the depth and strength of our Australian assets. The new structure will simplify management control and ensure that the company is best placed to leverage the skills of its talented Australian employees and program makers.

“There is no doubt that the world of content is becoming more complicated and competitive, and it is important that Australia has a strong local platform for its great sports and for homegrown creativity, as well as a showcase for international programs.”

At this stage certain key commercial terms of the proposed transaction have been agreed on a non-binding basis. Telstra and News Corp have signed a binding process agreement under which they will prepare long-form agreements to give legal effect to the commercial principles.

Telstra and News Corp will work to finalise the transaction, including obtaining regulatory approval, to be completed in the first half of 2018.

To Top