Rupert Murdoch's News Corp sells Foxtel to DAZN for $2.1 billion including debt

News Corp. NWSA-Q has decided to sell its Australian cable television unit Foxtel to British sports network DAZN for A$3.4 billion ($2.1 billion), including part of its debt, reducing the exposure of the Murdoch-controlled media empire to a sector disrupted by streaming platforms.

News Corp will gain a board seat and hold a 6% stake in DAZN, a London-based streaming platform, while DAZN (pronounced “Da Zone”) acquires broadcast rights to the Australian Football League and of the National Rugby League.

As Foxtel attempts to manage expensive sports rights and compete with larger global digital giants, the deal underlines News Corp's drive to streamline its portfolio as Rupert Murdoch shapes the future of his media empire.

Foxtel's valuation is seven times its 2024 earnings before interest, tax, depreciation and amortization, News Corp said in a statement.

Analysts at Morgan Stanley say in a note that Foxtel is one of News Corp's weakest assets and believe the higher-than-expected price received by the company is positive.

“Essentially, this is the first tangible result of management's review of the corporate structure, a lengthy process that has caused some concern among investors,” said Morningstar analyst Brian Han.

DAZN, which broadcasts in North America, Europe and Asia, is backed by Ukrainian-born billionaire Len Blavatnik, an American and British citizen.

He owns DAZN through his New York-based investment company, Access Industries, whose investment portfolio is valued at more than $35 billion. This company also owns a majority in the Warner Music Group.

DAZN competes against traditional television and satellite channels, offering a range of sports content, including American football, boxing and baseball. It also broadcasts European football in partnership with Italy's Serie A, Spain's LaLiga, Germany's Bundesliga and France's Ligue 1.

In October, sources told Reuters that Saudi Arabia's Public Investment Fund was considering taking a $1 billion minority stake in DAZN. That fund later said it was not in talks to acquire a stake.

Foxtel, launched in 1995, has struggled to gain traction as subscribers turn to cheaper streaming services like Netflix.

The company has expanded its offering by launching its own streaming services, such as Kayo, which offers live coverage of popular sports like the Australian Football League (Australian Football) and the National Rugby League, the premier rugby league of the country.

Kayo also offers international sports content through partnerships with channels such as ESPN.

However, rising sports broadcasting costs and falling revenues have hit profits, pushing Foxtel to share rights with free-to-air broadcasters.

The AFL's current seven-year A$4.5 billion deal with Foxtel – Channel Seven runs until 2031, while Cricket Australia will receive A$1.5 billion from the same partners.

Nine Entertainment, which owns streaming service Stan, owns the tennis rights until 2029 and is in talks with Rugby Australia for the rights beyond next year, in the run-up to the 2027 Rugby World Cup.

“Foxtel’s traditional premium pricing model has long been a point of contention, especially in an era dominated by more affordable streaming alternatives,” said independent telecoms analyst Paul Budde.

“DAZN’s entry into the Australian market, potentially offering competitive or lower pricing, could radically change consumer expectations and redefine the pricing landscape. »

News Corp CEO Robert Thomson said the deal would allow the company to focus on its core businesses in Dow Jones, digital real estate and publishing. News owns 61.4% of online real estate platform REA Group and is the parent company of publisher HarperCollins.

DAZN reported that Foxtel CEO Patrick Delany would continue in his role.

Shareholder loans, worth A$578 million, will be repaid in full and Foxtel's existing debt will be refinanced upon closing of the deal.

News Corp plans to finalize the Foxtel deal in the second half of 2025.

Australian telecom Telstra has 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.

News Corp shares listed on the Australian Stock Exchange rose 3.5 per cent to A$50.79 on Monday, outperforming a 1.6 per cent rise in the broader market. Telstra shares gained 1.1%.