The Pay TV market in Australia is set to see random changes soon. According to media reports, News Corp, owned by media mogul Rupert Murdoch, is looking to gain control of Australia’s largest pay-television provider, Foxtel. The move would put the company in a strategic position to take on the popularity of rival, Netflix.
A deal is reportedly brewing between News Corp. and Telstra Corp., the joint owners of Foxtel. While the deal will cut Telstra’s stake in the joint venture to less than 20 percent, News Corp’s share holding will raise to 51 percent. Both News Corp. and Telstra started off as equal partners in 2012, reports Bloomberg. For Telstra, the deal would be a relief as it can make a partial exit from Foxtel. Foxtel is currently under heavy pressure from cheaper on-demand streaming services.
The deal will involve News Corp incorporating its Fox Sports Australia business into Foxtel and opting to list the new business in stock exchanges. It will be valued at $8 billion. Netflix, which was launched in the Australian market in 2015, has become one of the top Pay TV networks.
By taking a controlling position, News Corp is hoping to improve Foxtel’s profit margins with attractive content. News Corp, battling the problem of declining print revenue, is pinning hopes on Fox Sports Australia which offers the country’s most-watched sports such as UK premier league soccer, international cricket, Australian football and rugby matches.
By adding Fox Sport’s content, Murdoch is hoping that Foxtel’s offerings would become more appealing to investors by the time the IPO is ready, Morningstar’s Han said. News Corp. spokesman Stephen Browning and Telstra’s Michael Zappone declined to comment.
Meanwhile, Foxtel is planning to add Netflix in the company’s own version of an on-demand streaming service. According to reports, Foxtel has approached overseas rights holders such as the BBC, Viacom and Discovery for securing video-on-demand rights.
By including Netflix in the streaming platform, Foxtel would be marking a departure from its traditional “wall garden” approach on content.
“For various reasons some of the streaming services seem to have a perception that you can watch it on more platforms. Foxtel you can watch in just as many places. We just need to neutralise that perception,” Foxtel director of content marketing Rob Farmer told Ad News, reports News Corp.