News Corp Weighs Sale of Australia Pay TV and Streaming Division, Reports Reuters

By Byron Kaye and Rishav Chatterjee

SYDNEY (Reuters) – News Corp, led by Rupert Murdoch, announced it is considering the sale of its Australian cable TV and streaming operation, Foxtel, following an inquiry about a potential deal. This move could mark the end of News Corp’s involvement with an asset that has struggled to adapt to the competition presented by streaming services.

In a recent trading update, News Corp reported a 5% decline in profits for the Foxtel division during the June quarter. However, the company’s overall profit increased by 11%, driven primarily by its real estate listings segment.

CEO Robert Thomson indicated that a review of the company’s business units had coincided with interest from external parties in acquiring Foxtel. "We are evaluating options … with our advisors in light of that external interest," Thomson stated.

Selling Foxtel would relieve News Corp of a significant yet challenging segment of its business, which primarily includes influential print media outlets and the book publisher HarperCollins. Foxtel, once a leader in the Australian pay TV market, has seen a decline in subscribers as cheaper streaming alternatives from competitors have flooded the market.

Since launching its own streaming service in 2020, Foxtel has attempted to mitigate losses in traditional subscriber revenue; however, subscriber revenue only showed a minimal increase of 1% in the June quarter. According to Morningstar analyst Brian Han, a sale could help the company resolve a strategic issue faced by many traditional media firms—balancing the profits from pay TV against the inevitable decline of the sector.

Foxtel’s sports offerings remain a key attraction for its subscribers, but these come with rising costs for broadcast rights, adding to the financial challenges the company faces.

News Corp’s shares, traded in Australia, saw a 7.6% rise as investors reacted positively to the company’s financial performance and prospects for Foxtel’s future. The company’s U.S.-listed shares also gained, rising by 4% in premarket trading.

While no specific valuation was provided for a potential sale of Foxtel, estimates from analysts suggest that using a multiple of four to six times its gross annual profit, the value could range from approximately $1.24 billion to $1.86 billion based on projected profits for 2024.

A spokesperson for Telstra, which holds a 35% stake in Foxtel, acknowledged News Corp’s statement but did not offer further comment.