News Corporation, headed by Murdoch, plans to offload its Australian subsidiary, Foxtel, to DAZN from the UK, valued at a staggering $2 billion.
Rupert Murdoch's News Corp has consented to offload its Australian cable TV entity Foxtel to the British-owned sports broadcasting network DAZN for a staggering 3.4 billion Australian dollars ($2.1 billion), inclusive of debt. This move mitigates News Corp's exposure to a sector disrupted heavily by streaming platforms.
News Corp will secure a board seat and maintain a 6% stake in DAZN, headquartered in London, a globally prominent streaming platform accessible in North America, Europe, and Asia. DAZN boasts backing from Ukrainian-born billionaire Len Blavatnik.
DAZN partners with Italy's Serie A, Spain's LaLiga, Germany's Bundesliga, and France's Ligue 1. It competes against conventional TV and satellite channels, providing a variety of sports content, such as American football, boxing, and baseball, through its streaming platform.
DAZN co-founder and CEO Shay Segev remarked, "Australians watch more sport than any nation globally, making this deal an incredibly thrilling opportunity for DAZN to enter a vital market, marking another milestone in our long-term vision to become the world's leading sports destination."
Launched by News Corp in 1995, Foxtel has dwindled News Corp's profits for years, due to viewers shifting to cheaper streaming alternatives like Netflix, causing burdens to the traditional paid content subscriptions. Foxtel has introduced its own streaming services such as Kayo, featuring live-streaming for local sports like the Australian Football League and the National Rugby League, as a strategy to regain share in the sports broadcasting market. But, its earnings continue to bear the brunt of the escalating costs of sports broadcasting rights coalescing with the plummeting subscriber revenue. To reduce costs, Foxtel often shares rights with free-to-air broadcasters.
Paul Budde, an independent telco analyst, opined, "Foxtel's conventional premium pricing model has always been contentious, especially in this streaming-dominated era featuring more cost-effective alternatives."
DAZN's entry into the Australian market, potentially proposing competitive or lower rates, could potentially alter consumer expectations, transforming the pricing landscape.
News Corp declared that the valuation of Foxtel equals seven times its projected 2024 earnings before interest, tax, depreciation, and amortization (EBITDA).
The deal will repay 578 million Australian dollars ($362 million) in shareholder loans fully and refinance Foxtel's debt upon closing.
News Corp CEO Robert Thomson suggested that the deal allows the company to focus on its core operations, including Dow Jones, digital real estate, and book publishing, as News Corp owns 61.4% of the online real estate platform REA Group and is the parent company of publisher HarperCollins.
The finalization of the deal is scheduled for the second half of 2025, subject to regulatory approval. The transaction calls for Australia's Foreign Investment Review Board (FIRB) clearance, given DAZN's international ownership.
Blavatnik is a dual US and British citizen, with an investment portfolio valued above $35 billion, according to Access Industries' website.
An official from Australia's Treasury, responsible for FIRB, declined to comment on specific cases.
DAZN's acquisition of Foxtel marks a significant shift for News Corp, allowing them to reduce their exposure to the disrupted broadcasting sector. With DAZN's entry into the Australian market, there might be potential changes in consumer expectations and pricing dynamics.
The partnership between DAZN and News Corp will also enable News Corp to focus more on its core operations, such as Dow Jones, digital real estate, and book publishing.
