Global media group News Corporation and Australian telecom Telstra have agreed to sell subscription television service Foxtel to global sports streaming giant DAZN - for an enterprise value of A$3.4 billion.
Rupert Murdoch's News Corp said it would be repaid $578 million of loans and take a 6% stake in DAZN, while Telstra would be repaid $128 million of loans and take a 3% stake in DAZN under the deal, which is expected to be completed in the first half of 2025.
News Corp owns 65% and Telstar 35% of Foxtel, which was created in 1995 as a joint venture between the two companies.
News Corp Chief Executive Robert Thomson said the sale was a victory for News Corp shareholders, DAZN and sport fans.
“Foxtel has been transformed into a genuine digital and streaming leader in Australia, and we believe DAZN is the right owner to take the business to the next level with their technological capabilities, global footprint and compelling sports rights,” Thomson said in an ASX announcement.
“This transaction also allows News Corp to focus on our other growth pillars of Dow Jones, Digital Real Estate and Book Publishing, while benefiting from repayment of our shareholder loans and an improved credit profile.”
DAZN Chief Executive Officer Shay Segev said: “Australians watch more sport than any other country in the world, which makes this deal an incredibly exciting opportunity for DAZN to enter a key market, marking another step in our long-term strategy to become the global home of sport.”
Telstra CEO Vicki Brady said: “Now is the right time for this change. Foxtel is a world-class streaming service, and I look forward to its continued success under DAZN’s ownership.”
The proposed transaction values Foxtel at an enterprise value of $3.4 billion, or more than 7x fiscal 2024 Foxtel earnings before interest, tax, interest, depreciation and amortisation (EBITDA).
The agreement follows a strategic and financial review of Foxtel as part of News Corp’s ongoing efforts to optimize its portfolio and simplify the structure of the Company.
Foxtel had a dominant market position in Australian pay television in the era of satellite and cable technology but lost subscribers when it was slow to adapt to the introduction of internet streaming and competition from Netflix, Stan and Amazon Prime Video.
At 1130am (AEDT) News Corp (ASX: NWS) Class B voting shares were trading at $49.86, up 80 cents (1.6%) after trading between $49.06 and $49.97, and capitalising the company at US$16.4 billion (A$26.0 billion).