News Corp and Australian telecom company Telstra Corp Ltd. announced plans Thursday to merge their jointly-owned pay television company, Foxtel, with Fox Sports Australia, in a move that could set up an eventual initial public offering.
If approved, the deal would result in News Corp controlling 65% of the new company, and Telstra owning the remaining 35% of what would be one of the largest pay-TV, sports and entertainment outlets in Australia, the companies said.
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"The proposed restructuring of Foxtel and Fox Sports will unlock value for News Corp shareholders and provide a clearer vision into the depth and strength of our Australian assets," said News Corp Chief Executive Robert Thomson.
The companies expect the deal to be completed in the first half of 2018. Approval will largely rest with the Australian Competition & Consumer Commission, though other regulators also are likely to have input.
In a statement, News Corp, which owns The Wall Street Journal, said the deal would leave the new company in a stronger position for a potential initial public offering in the future.
For News Corp, the company said the deal also would allow it to consolidate the earnings of the new company into its financial statements, which would result in a more diversified mix of revenue and earnings before interest, taxes, depreciation and amortization. That could help the company reduce its reliance on newspaper properties hit by weakness in advertising.
In its latest fiscal year, which ended June 30, News Corp reported Ebitda of $885 million, 47% of which came from its newspaper properties and 37% from its digital real-estate business. Foxtel's Ebitda came in at $568 million in the same period.
News Corp shares were up 0.8% in early-afternoon trading.
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(END) Dow Jones Newswires
August 17, 2017 14:33 ET (18:33 GMT)