News to write down combined Foxtel and Fox Sports by up to US$1 billion ahead of Telstra agreement
News Corp has indicated it expects to write down its investment in Foxtel by up to a billion US dollars, as the company concludes a deal with Telstra that will see the pay TV operator merge with Fox Sports Australia.
In a filing with the US Securities and Exchange Commission this morning, News Corporation said it expects to record between US$700 million and US$1 billion in write downs related to the combined business ahead of the deal, which is expected to be finalised by the middle of the year.
News attributed the planned write downs to lower than expected sales of certain new products and broadcast sales at Foxtel, resulting in a reduction in expected future cash flows.
In last year’s annual report News valued its 50% share of Foxtel at $1.2bn implying the business, excluding Fox Sports, to be worth $US 2.4bn.
Telstra, on the other hand, has told the ASX this morning that it expects to record a gain of AU$263 million following completion of the deal.
The deal, which hit problems late last year when the two parties clashed over the value of Sky News’ feed, will see News Corp take 65% of the combined entity with Telstra acquiring the balance.
As a consequence of the new structure, News will record the combined Foxtel results in its accounts and appoint four company directors, with Pat Delaney as the CEO. Minority stakeholder Telstra will nominate two board members.
In the joint ASX announcement by Telstra and News this morning, the shareholders laid out the direction of the merged company in putting greater emphasis on live streaming products and an expanded content library, including Australian written, produced and directed programming.
Telstra and News also flagged they expect to work on developing greater operating efficiencies across the combined businesses while expanding its distribution channels along with leveraging News Corp’s local and global assets to grow the brand.
News Corp chief executive Robert Thomson said in the ASX statement: “The launch of the combined company will mark the dawn of a new era for our Australian business, and Foxtel and FOX SPORTS Australia will together be a formidable force.
“We will be able to use our powerful media platforms to promote the unique sports and entertainment assets in the two companies, and improve services for consumers and advertisers. Patrick Delany and his talented team will be absolutely focused on serving viewers compelling, contemporary Australian content and superlative sports coverage on personalized platforms.”
Telstra CEO Andy Penn said the the combined Foxtel would continue to be an important part of Telstra’s media strategy: “Our customers are streaming more and more sport and entertainment on their TV at home and on their mobile devices while on the move. Telstra will be the exclusive telco sales agent for the combined entity on mobile and IP products and we will continue with our broadcast reseller arrangements.”
The transaction is expected to close during the fourth quarter of fiscal year 2018.
Will Foxtel be paying any tax at all this year after the right downs?
https://www.michaelwest.com.au/tax-dodgers/foxtel-cable-television-pty-limited/
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What a joke we are
Network 10 share investment loss $$$ well its a few million to add to the real red ink.
Foxtel puck – don’t mention how no one wants it not even Netflix because of Foxtel being stuck in the past not allowing Netflix to include it’s “Button” on our puck remote.
Our best Staff walking away from Foxtel weekly. Were still doing the same tricks bringing back a color version of TCM…but you have to get the movies package where as TCM was included within the basic package. Over 200 staff have left in just 6 months, whilst South Africa call center grows, we have the ‘CEO Agent of change’ in charge doing his fly by night tours of Foxtel offices doing head counts. As our fomer CEO Richard Freudenstein said 4 years ago if you dont look after your staff and your family of customers they will walk away from you
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Well the front of house sackings have already started
77 staff sacked today from Moonee ponds and Robina from a variety of roles.
The same old lines “we have to get match fit”
So much for the Agent of Change CEO Patrick the axe man !
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The sackings have commenced today
77 jobs in front of house (phones) in Mooneeponds and Robina with many more to come
So much for winners have parties losers have meetings!
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Thanks Moonee Ponds,
Foxtel have confirmed a yet to be decided number of job cuts will be made in their call centres. Our story is here.
https://mumbrella.com.au/foxtel-make-layoffs-call-centres-compete-global-counterparts-503863
Kind regards,
Paul Wallbank
News Editor
Hi MOONEE PONDS,
Thanks for flagging this. We followed up and reported the outcome here:
https://mumbrella.com.au/foxtel-make-layoffs-call-centres-compete-global-counterparts-503863
Vivienne – Mumbrella