News Corp Sells Foxtel to DAZN in Strategic Move
NEWS CORPORATION.. (NWS) Share Update December 2024 Sunday 22nd
News Corp to Sell Foxtel to DAZN for A$3.4 Billion
News Corporation has announced a major strategic shift by agreeing to sell its Foxtel Group to DAZN Group Limited for an enterprise value of A$3.4 billion, marking a significant transformation in the media landscape.
Instant Summary:
- Foxtel sold to DAZN for A$3.4 billion.
- News Corp to receive full repayment of A$578 million in shareholder loans.
- News Corp retains a 6% minority stake in DAZN.
- Telstra also sells its stake and receives loan repayment.
- Transaction expected to close in the second half of fiscal 2025.
Transaction Details
News Corporation has entered into a definitive agreement to sell its Foxtel Group to DAZN Group Limited, a global leader in sports streaming. The deal values Foxtel at an enterprise value of A$3.4 billion, representing more than 7 times its fiscal 2024 EBITDA. News Corp will receive full repayment of its A$578 million shareholder loans in cash at closing.
Under the agreement, News Corp will retain a 6% minority equity interest in DAZN and a seat on its Board of Directors. Telstra Group Ltd, which also holds a minority stake in Foxtel, will sell its interest and receive repayment of A$128 million in shareholder loans, taking a 3% stake in DAZN.
Strategic Rationale
This sale is part of News Corp's ongoing efforts to streamline its portfolio and focus on key growth areas such as Dow Jones, Digital Real Estate Services, and Book Publishing. The transaction allows News Corp to simplify its structure and enhance long-term stockholder value by aligning with DAZN's global reach and technological capabilities.
Foxtel, under News Corp's management, has become a digital and streaming leader in sports and entertainment. DAZN's acquisition is expected to further strengthen Foxtel's position as a digital-first business, leveraging DAZN's extensive content portfolio and industry-leading technology.
Future Prospects
The transaction is anticipated to close in the second half of fiscal 2025, subject to regulatory approvals and customary closing conditions. For financial reporting purposes, Foxtel will be classified as discontinued operations as of the second quarter of fiscal 2025.
News Corp's CEO, Robert Thomson, stated that the agreement is a victory for shareholders and sports fans, emphasizing DAZN's potential to elevate Foxtel's business with its global footprint and compelling sports rights.
This transaction is expected to positively impact News Corp's financial profile by simplifying its business structure and focusing on core growth areas. The repayment of shareholder loans and the minority stake in DAZN provide financial flexibility and potential future returns. The deal could enhance News Corp's stock value by improving its credit profile and aligning with a growing global sports streaming leader.
Investor Reaction:
Analysts are likely to view this transaction positively, as it aligns with News Corp's strategic focus on growth segments. The market may react favorably to the streamlined operations and potential for future returns from the DAZN stake.
Conclusion:
Investors should consider the long-term benefits of News Corp's strategic shift and the potential for enhanced shareholder value. The focus on core growth areas and the partnership with DAZN position News Corp for future success.