Foxtel and Fox Sports confirm merger
Telstra and News Corp have confirmed Fox Sports and Foxtel will merge into one “premium sports and entertainment company”, with the aim to complete the deal by the first half of 2018.
It comes three months after Australian News Channel (ANC) – the operators of Sky News – began taking on producing responsibilities for the Fox Sports News Channel.
It is not yet clear if the merger will result in redundancies.
The merger was first discussed in March last year, with Telstra considering an initial $4.5b public offering or sale of its 50% stake in Foxtel, following the appointment of Peter Tonagh as chief executive.
However, the plan was delayed in April, due to the volume of work which needed to be done to prepare for the pay television join venture.
Telstra and News Corp both own 50% of Foxtel, while Fox Sports is 100% owned by News Corp.
The merger will reduce Telstra’s stake to 35%, while News Corp will increase its stake to 65%.
According to The Australian Financial review, the initial plan will not be to float the business, to give Tonagh time to implement its subscription video on demand strategy, Foxtel Now, which launched two months ago.
However, when it is listed, News Corp is set to appoint the merged company’s chairman and majority of directors.
Telstra’s chief executive, Andy Penn, said the investment in the new company would be an “important part of Telstra’s media strategy”, and would allow for flexibility in the media environment.
News Corp chief executive Robert Thompson said the proposed re-structure would unlock value for News Corp shareholders.
“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,” he said.
“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.”
A statement from the companies noted at this stage certain key commercial terms of the proposed transaction are non-binding, but both 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.
