News Corp Sells Foxtel to DAZN for $2.1 Billion: What You Need to Know
In a major shift in the media and sports streaming landscape, News Corp and Australian telecommunications giant Telstra have agreed to sell Foxtel, their Australian cable TV and streaming service, to DAZN, a British sports streaming platform. The deal, valued at A$3.4 billion (around $2.1 billion), marks a significant step in the ongoing transformation of the media industry.
Here’s a breakdown of the deal, why it’s happening, and what it means for the future of sports streaming in Australia and beyond.
What’s Included in the Foxtel Sale?
As part of the sale agreement, News Corp and Telstra will sell their stakes in Foxtel, with DAZN taking control of the business. Foxtel has been facing challenges in recent years due to the growing popularity of cheaper streaming services like Netflix, with many Australians shifting away from traditional cable TV subscriptions.
- Debt and Shareholder Loans: The sale includes Foxtel’s debt being refinanced, with shareholder loans valued at A$578 million being repaid in full.
- Ownership Stakes in DAZN: After the deal, News Corp will retain a 6% stake in DAZN, and Telstra will own 3% of the British platform.
- Cash for Telstra: Telstra will receive A$128 million in cash for the repayment of its shareholder loans.
This deal not only marks a significant reshaping of the Australian media market but also signals DAZN’s continued push to become a global leader in sports streaming.
Why Is This Deal Happening Now?
Foxtel, once the dominant player in Australian television and broadcasting, has seen a steady decline in subscribers. As more people switch to cheaper, on-demand streaming services like Netflix, Foxtel’s traditional subscription model has struggled to compete. Even Foxtel’s own streaming service, which offers lower-cost options, hasn’t been enough to turn the tide.
Murdoch’s News Corp, which owns a significant stake in Foxtel, has been grappling with these challenges for some time. The company’s profit has been negatively affected by Foxtel’s declining performance, which made the decision to sell a natural step forward.
This sale to DAZN is part of News Corp’s ongoing strategy to adjust its business model and focus on more profitable ventures. DAZN, meanwhile, is expanding its sports streaming operations, and the acquisition of Foxtel gives it a foothold in the Australian market—a country where, as Shay Segev, co-founder and CEO of DAZN, puts it, “Australians watch more sport than any other country in the world”.
Who Is DAZN and What Does This Deal Mean for Them?
DAZN is a fast-growing sports streaming platform that has made waves globally since its founding in 2016. Known for its subscription-based service, DAZN aims to become the global leader in sports content, providing fans with access to a wide range of live and on-demand sports events.
For DAZN, acquiring Foxtel is a strategic move that helps them establish a stronger presence in the Australian market. The deal also fits into DAZN’s long-term vision of becoming the “global home of sport,” as it continues to expand its portfolio beyond its existing base in Europe, North America, and Japan.
- Access to Australian Sports Market: With Australians being avid sports fans, the acquisition opens up new opportunities for DAZN to deliver exclusive content and events tailored to local audiences.
- Expanding DAZN’s Global Footprint: As DAZN expands its reach into new markets, this acquisition is another step toward its goal of competing with giants like Apple TV and Amazon Prime Video, which are also making moves into the sports streaming space.
What Does This Mean for Foxtel’s Future?
Foxtel’s transition to DAZN ownership will likely lead to some significant changes. For starters, DAZN is known for its focus on sports content, and it’s expected that they will double down on this aspect of Foxtel’s offering. This could mean an even stronger emphasis on live sports streaming, which has become a key driver for both Foxtel and DAZN.
As a result, the future of Foxtel’s traditional cable TV services may be in question. The deal could lead to the streamlining of Foxtel’s offerings, with more focus on digital and streaming services, in line with the global shift toward on-demand content.
However, one key aspect of the deal is DAZN’s commitment to the Australian market. As Segev points out, Australians love their sports, and DAZN’s entry into the local market could bring new and exciting opportunities for sports fans. The platform’s growing catalogue could feature more exclusive content, live sports events, and new partnerships with major leagues, broadcasters, and content creators.
The Impact on News Corp and Telstra
For News Corp, this sale represents a strategic shift as the company looks to reduce its reliance on a declining segment and focus on more profitable ventures. The 6% stake in DAZN gives News Corp a share in a rapidly growing global sports streaming platform, positioning it to benefit from DAZN’s future success.
Telstra, on the other hand, has received a substantial A$128 million cash injection from the deal and will hold a 3% stake in DAZN. While Telstra’s core business remains focused on telecommunications, this deal is likely to be seen as a smart move for the company, allowing it to diversify its investments and benefit from the growth of DAZN’s sports streaming service.
Both companies also stand to benefit from DAZN’s growing influence in global sports broadcasting, especially as the platform looks to expand into new markets and build its content library.
What Happens Next?
While the deal has been agreed upon, several steps remain before the acquisition is finalized, including debt refinancing and loan repayments. Once the transaction is complete, Foxtel’s transition to DAZN will begin, and Australian sports fans can expect to see a refreshed streaming platform that caters to their passion for sports.
As the global sports streaming market continues to evolve, this deal could mark a major shift in the way Australians consume live sports content. With DAZN’s expertise in sports broadcasting and Foxtel’s established presence in Australia, the future of sports streaming looks promising, and we can expect more competition among streaming platforms for sports rights and exclusive content.
Conclusion: A New Era for Sports Streaming in Australia
In conclusion, the sale of Foxtel to DAZN for $2.1 billion represents a major reshaping of the Australian media landscape. With News Corp and Telstra both retaining stakes in DAZN, this partnership opens up exciting possibilities for the future of sports streaming. As DAZN continues to grow and expand, Australian sports fans can look forward to a new era of accessible, high-quality sports content.
Whether you’re a long-time Foxtel subscriber or a sports fan looking for more options, this deal is one to watch closely.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.