Foxtel headquarters are seen at North Ryde on June 20, 2012 in Sydney.
Cameron Spencer | Getty Images News | Getty Images
Rupert Murdoch’s News Corp said it may sell Australian cable TV and streaming unit Foxtel after receiving an approach, a deal that would end its involvement in a high-overhead asset that has struggled to adapt to the Netflix era.
News Corp said it was considering the deal in a trading update in which the division posted a 5% profit decline for the June quarter. Overall profit at News Corp, which split from Murdoch’s Fox Corp in 2013, rose 11% in the period, led by its real estate listings business.
A review of the News Corp business units had “coincided recently with third-party interest in a potential transaction involving the Foxtel”, CEO Robert Thomson said in a statement.
“We are evaluating options … with our advisors in light of that external interest.”
A sale of Foxtel would relieve News Corp, which holds most of the Murdoch family’s print mastheads like the Wall Street Journal and book publisher HarperCollins, of a business that looms large on the Australian media landscape but has faced disruption from cheap, narrow-margin streaming rivals.
With its physical set-top boxes installed alongside people’s televisions, Foxtel once dominated Australian pay TV but it has shed subscribers who pay about 100 Australian dollars ($66) a month for that service since Netflix, Disney and Amazon began rushing out streaming offers for a fraction of the price.
Foxtel, of which dominant Australian telco Telstra owns 35%, started its own streaming service in 2020, alongside the set-top boxes. That has offset a decline in higher-paying traditional subscriber numbers but not in subscriber revenue, which was up 1% in the June quarter.
Still, News Corp’s Australia-listed shares jumped 8% by mid-session as investors cheered a better-than-expected result and the prospect of a resolution to questions about Foxtel’s future ownership.
News Corp didn’t put a valuation on a sale of Foxtel. Telstra was not immediately available for comment.
“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.