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June 20, 2012. Foxtel’s headquarters are located in North Ryde, Sydney.
Cameron Spencer | Getty Images News | Getty Images
Rupert Murdoch News Corp The company said it may sell Australian cable and streaming unit Foxtel after receiving an offer in a deal that would end its involvement in a high-overhead asset that it has struggled to adapt Netflix era.
News Corp said in a trading update that it was considering the deal as the division reported a 5 percent fall in profit for the June quarter. News Corp, which was spun off from Murdoch, had overall profit of Fox Corporation In 2013, the company’s stock price rose 11% during the period, mainly due to its real estate listing business.
Chief Executive Robert Thomson said in a statement that the review of News Corp’s business units “has recently coincided with interest from third parties in a potential transaction involving Foxtel”.
“We are evaluating options with our advisors, taking into account outside interest.”
A Foxtel sale would free up News Corp, which owns most of the Murdoch family’s print mastheads such as The Wall Street Journal and book publisher HarperCollins, a business that is a major player in Australia’s media landscape but faces an onslaught from cheaper, thinly-margin streaming rivals.
Foxtel once dominated Australia’s pay-TV market with physical set-top boxes that sit next to televisions, but since the advent of Netflix it has lost subscribers who paid about A$100 ($66) a month for the service. Disney and Amazon Start launching streaming services at low prices.
Foxtel, one of the major Australian telecommunications companies Telstra which owns a 35% stake, launched its own streaming service in 2020, along with a set-top box. This offset a decline in the number of paying traditional subscribers, but not in user revenue, which rose 1% in the June quarter.
still, News Corp.’s Australian listed shares Shares in the company were up 8% by midday as investors cheered better-than-expected results and hopes that questions about the future ownership of Foxtel will be resolved.
News Corp. did not put a valuation on the Foxtel sale. A valuation proposed by Morgan Stanley in 2021 valued Foxtel at four to six times annual gross profit, which would value it at between $1.24 billion and $1.86 billion based on its 2024 profits.
A Telstra spokesman acknowledged News Corp’s statement but declined to comment further.
“Investors were disappointed that it took so long for the company to make a formal announcement about the simplification process, but while that process was ongoing, the company continued to perform well financially, with better-than-expected revenue and margins,” said Craig Huber, an analyst at Huber Research Partners.
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