Rupert Murdoch’s News Corp May Sell Australian Cable TV Unit Foxtel Amid Streaming Competition
News Corporation, the media conglomerate owned by Rupert Murdoch, is considering selling its Australian cable TV and streaming unit Foxtel after receiving an unsolicited bid. The potential sale comes as Foxtel struggles to compete with cheaper, on-demand streaming services like Netflix and Disney+, and represents a significant shift in the media landscape.
Key Takeaways:
- News Corp is exploring selling Foxtel due to ongoing challenges in adapting to the streaming era. Foxtel has battled against the rise of streaming services like Netflix and Disney+, which offer a lower cost and a wider selection of content.
- The potential deal could relieve News Corp of a high-overhead asset and focus on its core businesses. News Corp has been actively reviewing its business units and the sale would allow them to focus on its print media, book publishing, and real estate listings businesses.
- Foxtel’s valuation is estimated to be between $1.24B and $1.86B, based on a multiple of gross annual profit. This potential sale could bring in a substantial amount of revenue for News Corp, further fueling their core business growth strategies.
- The sale could also offer a significant opportunity for potential buyers who are looking to gain a foothold in the Australian media market. This move could impact the Australian media market dynamics significantly as it would create a new player in the market and potentially lead to further consolidation within the industry.
Navigating the Streaming Revolution
Foxtel has been a dominant player in the Australian pay-TV market for decades, with its traditional set-top box service offering a wide variety of channels and content. However, the rise of streaming services like Netflix, Amazon, and Disney+ has significantly disrupted the traditional pay-TV model. These streaming platforms offer a lower monthly cost, access to a wider selection of content, and the ability to watch on-demand, which has appealed to younger generations and cost-conscious consumers.
Foxtel has attempted to adapt by launching its own streaming service, Foxtel Now, in 2020. However, this has not been enough to offset the decline in its traditional subscriber base. The company has experienced declining subscriber revenue, despite the growth in its streaming service.
"Investors are getting frustrated how long it’s taking to make a formal announcement about the company getting simplified, but while that process is going on, the financials continue to come in well with both revenue and margins better than expected," said Craig Huber, analyst at Huber Research Partners.
A New Chapter for Foxtel?
The potential sale of Foxtel represents a turning point for the company and a significant shift in the Australian media landscape. The sale could allow News Corp to focus on its core businesses and navigate the changing media landscape.
"We are evaluating options … with our advisors in light of that external interest," said Robert Thomson, CEO of News Corp. "We are constantly reviewing our business and opportunities, and we believe this transaction is in the best interests of our shareholders."
However, the sale also raises questions about the future of Foxtel. The company has a significant presence in the Australian media market and employs thousands of people. The new owner will need to decide how to manage the company and adapt to the evolving media landscape.
The potential sale of Foxtel is a reminder of the ongoing disruption that is shaking up the media industry. Traditional media companies are being forced to adapt to the new world of streaming and digital content. This sale could be a major turning point for the Australian media market and will have a significant impact on the future of Foxtel.
