News Corp and Telstra fail to reach agreement over Sky News before deadline

Foxtel’s owners News Corp and Telstra have failed to reach an agreement over carriage fees for Sky News before the deal’s expiry on December 31 last year.

The companies were negotiating on fees in the lead up to the New Year, looking to lock in a new contract before the deal expired.

But Mumbrella understands they have not yet reached an agreement, with negotiations still ongoing.

Mumbrella understands Sky News’ fees paid by Foxtel had not changed in more than a decade

Late last year, Sky News – which is now 100% owned by News Corp – had proposed an increase in annual carriage fees paid by Foxtel, which Mumbrella understands stood at just over $30m.

Mumbrella understands that fee had not changed for more than a decade and News Corp proposed a large jump in the fees paid by Foxtel but Telstra blocked the proposal, counter-proposing a lower sum.

It is currently unclear how many weeks Sky News can air on Foxtel with an expired contract.

Insiders close to News Corp suggested failure to meet an agreement could stall the planned Foxtel and Fox Sports merger deal. News Corp currently owns 100% of Fox Sports.

Almost a month ago, the Australian Competition and Consumer Commission cleared the proposed merger, ruling it would not significantly decrease competition in the market. As it stands, Telstra and News Corp are in “a binding process agreement”.

Under the proposal for the Foxtel and Fox Sports merger, News Corp would hold 65% of the merged entity while Telstra would have 35%. The plan was intended to allow for shares in the combined Foxtel – Fox Sports offering to potentially be floated on the ASX.

But late last year, Murdoch’s 21st Century Fox  agreed to sell most of its entertainment assets to Disney Co. As a result of Murdoch’s returned focus on the news business, questions have been raised about whether News Corp would still want the merger to go ahead.

Mumbrella has approached News Corp and Telstra for comment.