Telstra and News Corp to merge pay-TV offerings

By:
Natalie Bannerman
Published on:

Foxtel and Fox Sports Australia, owned by Telstra and News Corp, will be combined into one company in a new agreement, due to complete by 2018

Telstra and News Corporation have announced plans to merge their pay-TV services, Foxtel and Fox Sports Australia, into one new company.

The move comes as the two companies attempt to create scale in Australia’s increasingly competitive pay-TV marketplace, creating “one of the largest pay-TV, sports and entertainment outlets in Australia, the companies said.

The deal, which is set to complete in the first half of 2018, will see News Corp with a 65% share of the new entity, while Telstra will own the remaining 35%. In addition, News Corp will appoint the chairman and majority of the board, leaving Telstra to select the remaining directors. 

Robert Thomson, chief executive at News Corp, 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 programme makers.”

Subject to contract and approval from the Australian Competition & Consumer Commission, the newly formed company aims to invest in Australian written, produced and directed programming; deliver a wide range of new products across various platforms and devices; invest in new content and programming in line with customer demand and expand distribution channels for Foxtel and Fox Sports Australia, creating greater operating efficiencies.

Once the deal is approved, News Corp says it will “consolidate the new company into its financial statements”.

“Our strategically significant investment in the new company will be an important part of Telstra’s media strategy,” said Andy Penn, CEO of Telstra. “Under this arrangement Telstra will continue to support the company with our broadcast re-seller arrangements which is a major strategic component for us."

He added: “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.”