Murdoch’s News Corp. is set to sell Foxtel to DAZN for $2.1 billion

News Corp has consented to the sale of its Australian cable TV unit, Foxtel, to the British-owned sports network DAZN for A$3.4 billion ($2 billion) in cash, including debt. This transaction reduces the Murdoch-controlled media empire’s exposure to a business that has been disrupted by streaming platforms.

News Corp will acquire a board seat and a 6% stake in DAZN, a streaming platform headquartered in London that is available in North America, Europe, and Asia. DAZN is backed by Ukranian-born billionaire Len Blavatnik.

Blavatnik, a dual citizen of the United States and the United Kingdom, holds DAZN through his New York-based investment firm, Access Industries. Access Industries’ investment portfolio is valued at over $35 billion. Additionally, it holds a majority stake in Warner Music Group.

DAZN offers a variety of sports content, such as American football, boxing, and baseball, and competes with traditional TV and satellite channels. It collaborates with Italy’s Serie A, Spain’s LaLiga, Germany’s Bundesliga, and France’s Ligue 1 to broadcast European football.

Saudi Arabia’s Public Investment Fund (PIF) was among potential bidders investigating the purchase of a minority stake in DAZN worth approximately $1 billion, according to two individuals with knowledge of the matter who spoke with Reuters in October.

Subsequently, PIF declared that it was not engaged in negotiations to acquire a stake.

Shay Segev, DAZN’s co-founder and CEO, stated, “This deal presents an incredibly exciting opportunity for DAZN to enter a key market, as Australians watch more sport than any other country in the world.”

Patrick Delany, the CEO of Foxtel, will remain in his position, according to DAZN.
For many years, Foxtel, which was established by News Corp in 1995, has been a significant drain on the media company’s profits. This is due to the fact that individuals who previously paid monthly subscriptions for Foxtel’s broadcast content have since migrated to more affordable streaming options, such as Netflix (NFLX.O).

It has attempted to diversify by incorporating its own streaming services, such as Kayo, which broadcasts the Australian Football League (AFL) and the National Rugby League (NRL) live, as well as ESPN.

Nevertheless, its earnings have been negatively impacted by the escalating cost of sports broadcasting rights, which has coincided with a decrease in subscriber revenue. Foxtel frequently distributes its rights to free-to-air broadcasters in order to mitigate expenses.

Paul Budde, an independent telco analyst, stated, “Foxtel’s traditional premium pricing model has long been a source of contention, particularly in an era characterized by more affordable streaming alternatives.”

“DAZN’s entry into the Australian market, potentially offering competitive or lower rates, could dramatically shift consumer expectations and reshape the pricing landscape.”

Cricket Australia will receive A$1.5 billion from the same partners over the same time period, while the AFL’s current seven-year agreement with Foxtel-Channel Seven, which extends until 2031, is valued at A$4.5 billion.

Nine Entertainment (NEC.AX), which operates its own streaming service, Stan, has secured tennis rights, including the Australian Open Grand Slam, until 2029.

Nine is also in exclusive negotiations with Rugby Australia for broadcast rights that extend beyond the current year, as the nation prepares to host the Rugby World Cup in 2027.

The primary objective of the news corporation is to publish.

In a statement, News Corp stated that the valuation of Foxtel is seven times its 2024 earnings before interest, tax, depreciation, and amortization (EBITDA).

The complete repayment of outstanding shareholder loans assessed at A$578 million and the refinancing of Foxtel’s current debt will occur at the closing of the transaction.

Robert Thomson, CEO of News Corp, stated that the agreement would enable the company to concentrate on its primary operations, which include Dow Jones, digital real estate, and book publishing. The parent company of publisher HarperCollins is News, which owns 61.4% of online real estate platform REA Group (REA.AX).

News Corp anticipates concluding the Foxtel transaction in the latter half of 2025. The Foreign Investment Review Board (FIRB) will be required to approve it.

The Treasury, which supervises the FIRB, declined to provide any commentary on specific cases, according to a spokesperson.

Telstra (TLS.AX), an Australian telecommunications company, has also divested its 35% stake in Foxtel to DAZN. In exchange, it will receive A$128 million in cash and a 3% stake in DAZN.

On Monday, News Corp’s ASX-listed shares increased by 3.5% to A$50.79, surpassing the 1.6% increase in the broader market (.AXJO). Telstra’s shares experienced a 1.1% increase.

$1 is equivalent to 1.5997 Australian dollars.