Foxtel has spent the past decade pivoting to the streaming era, building Kayo and Binge – which have much leaner profit margins – while preserving its legacy base of around 1 million subscribers who pay, on average, $90 a month. It has grown its total paying subscription base to 4.7 million people.
Any sale of Foxtel would have a flow-on effect on long-term content deals, multi-billion dollar sports rights packages, and more.
Mr Thomson told analysts that News Corp had a “significant overture that we are naturally assessing”, but declined to provide further details.
“We have full faith in the potential of Foxtel and the talented team at Foxtel,” he said. “On behalf of shareholders, we have to evaluate any interest … You’ll have to stay tuned. Not indefinitely, not perpetually, not ad infinitum.”
It has been a difficult week for cable networks in the United States.
Warner Bros. Discover wrote down the value of its TV assets by $US9.1 billion ($13.8 billion) earlier this week, while Paramount, which owns Network Ten, did the same by nearly $US6 billion.
A significant factor in any sale of Foxtel is the renegotiation of the NRL sports rights, which are due to expire in 2027, which it shares with Nine Entertainment. Sources close to the NRL say the code is considering bringing forward its renewal discussions to later this year. Foxtel has secured the rights to the AFL and most of the cricket until the early 2030s.
Revenue climbs
News Corp has long wrestled with what to do with Foxtel. After repeatedly trying to float the company, unsuccessfully, it has also navigated some inbound interest. In 2021, a special purpose acquisition company run by American TV executive Leo Hindery offered $3 billion for Foxtel.
In a bid to capture an aggregation market of consumers tired of subscribing to many streaming services, it launched Hubbl. It has cost $77 million so far.
It has content pipeline challenges, however.
Its long-term deal with HBO, which produces shows like The Last of Us and House of the Dragon, is expected to end early next year as the network’s owner, Warner Bros. Discovery, launches its own streaming platform, Max, locally. It has also lost some content from the BBC as well as A&E.
Meanwhile, News Corp and Telstra have both pulled money from the business through large shareholder loans. News Corp has a near $US600 million loan to Foxtel, chief financial officer Susan Panuccio told analysts. “Any transaction we contemplate will deal with those loans,” she said.
The announcement came as News Corp released its results. Its quarterly revenue rose 6 per cent to $US2.58 billion, driven by 21 per cent growth at ASX-listed REA Group. Earnings before interest, taxation, depreciation and amortisation increased 11 per cent to $US380 million, despite a 38 per cent fall in its News Media division.
For the full financial year, News Corp’s revenue rose 2 per cent to $US10.1 billion, while earnings were up 8 per cent to $1.5 billion. Its results were driven by higher earnings in its book publishing arm – it owns publisher Harper Collins, Dow Jones, and REA.
Foxtel was formed in 1995 as a joint venture between News Corp and Telstra. It later acquired rival Austar and merged with Fox Sports Australia.
