((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
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The operation values Foxtel at seven times 2024 Ebitda
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News Corp takes 6% stake in global sports broadcaster DAZN
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DAZN is backed by Ukrainian-born billionaire Len Blavatnik
(Adds analyst commentary, sports rights context in paragraphs 7-12, updates stock price movements in last paragraph) by Scott Murdoch and Rishav Chatterjee
News Corp has agreed to sell its Australian cable television unit Foxtel to British sports network DAZN for A$3.4 billion ($2 billion), including debt, reducing the Murdoch-controlled media empire's exposure to a business disrupted by streaming platforms.
News Corp will gain a board seat and 6% stake in DAZN, a London-based global streaming platform available in North America, Europe and Asia and backed by Ukrainian-born billionaire Len Blavatnik .
DAZN is a broadcast partner of the Italian Serie A, the Spanish LaLiga, the German Bundesliga and the French Ligue 1. It competes with traditional television channels and satellite channels and provides access to a range of sports content, including American Football, boxing and baseball, on its streaming platform.
“Australians watch more sport than any other country in the world, making this deal an incredibly exciting opportunity for DAZN to enter a key market, marking another step in our long-term strategy to become the global home of sports,” said Shay Segev, co-founder and CEO of DAZN.
Foxtel, launched by News Corp in 1995, has weighed on the media giant's profits for years as the number of people paying monthly subscriptions for its broadcast content shifted to cheaper streaming options like Netflix NFLX.O .
It has tried to diversify by adding its own streaming services like Kayo, which broadcasts live local sports Australian Football League (AFL) and National Rugby League (NRL), in order to regain market share in the broadcasting field sporty. It also broadcasts ESPN.
However, its revenues suffered from the soaring cost of rights to broadcast sporting events, even as subscriber revenues declined. To offset costs, Foxtel often shares rights with free-to-air broadcasters.
“Foxtel’s traditional premium pricing model has long been a point of contention, particularly in an era dominated by more affordable streaming alternatives,” said Paul Budde, an independent analyst specializing in telecommunications.
“The arrival of DAZN in the Australian market, which could offer competitive or lower prices, could radically change consumer expectations and reshape the pricing landscape
The AFL's current deal with Foxtel-Channel Seven, which runs until 2031, is worth A$4.5 billion, while Cricket Australia will receive A$1.5 billion from the same partners during the same period.
Tennis rights, including the Australian Open Grand Slam, have been reserved through 2029 by Nine Entertainment NEC.AX, which has its own streaming service, Stan.
Nine is also in exclusive talks with Rugby Australia for broadcast rights beyond next year, as the country prepares to host the Rugby World Cup in 2027.
NEWS CORP FOCUS ON PUBLISHING
Foxtel's valuation represents seven times its 2024 earnings before interest, tax, depreciation and amortization (Ebitda), News Corp said in a statement.
As part of the transaction, shareholder loans worth A$578 million will be repaid in full and Foxtel's existing debt will be refinanced upon completion of the transaction.
News Corp chief executive Robert Thomson said the deal would allow the company to focus on its core businesses of Dow Jones, digital real estate and book publishing. News owns 61.4% of online real estate platform REA Group REA.AX and is the parent company of publisher HarperCollins.
The transaction is expected to be completed in the second half of 2025 and is subject to regulatory approval, News Corp said. Since DAZN is foreign-owned, the transaction will need approval from the Foreign Investment Review Board (FIRB).
Mr. Blavatnik, who holds dual American and British citizenship, is the founder of Access Industries, whose investment portfolio amounts to more than $35 billion, according to the company's website.
The FIRB did not immediately respond to a Reuters request for comment.
Australian operator Telstra TLS.AX also sold its 35% stake in Foxtel to DAZN and will receive A$128 million in cash as well as a 3% stake in DAZN.
ASX-listed News Corp shares rose 3% to A$50.57 on Monday, outpacing a 1.3% rise on the broader .AXJO market. Telstra shares gained 0.9%.
$1 = 1.5997 Australian dollars)
