News Corp. weighs exit from Australian pay-TV business Foxtel

Rupert Murdoch's News Corp. is considering an exit from its Australian pay-TV venture, Foxtel. News Corp. CEO Robert Thomson says a third party has registered interest in the asset, a 65:35 JV with Telstra.

He told an analysts' call the company had been conducting a "strategic review" of its assets over the last year, ABC Australia reported. The approach was a "significant overture" and the company was evaluating its options, he said.

Like every other legacy pay-TV business, Foxtel has been heavily impacted by the emergence of Netflix and other streaming services in the past decade.

It has responded by launching its own streaming channels, including sports service Kayo, video streaming service Binge and aggregation platform Hubbl. Partner Telstra offers its own streaming aggregation service. 

An annual Deloitte survey into consumer behavior into Australia's entertainment market found that digital TV spending fell from 62 Australian dollars (US$41) to A$57 ($37) per household last year.

Despite that, News reported some modest revenue and subscriber growth in its global cable TV and streaming business in the second quarter.

Revenue grew 1% to $506 million, mostly as a result of growth in Kayo and Binge, but this was offset by the fall in pay-TV subs and forex fluctuations.

AU$1.1B valuation 

Foxtel streaming revenue represented 32% of subscription revenues in the quarter, up from 29% a year ago. Its subs base grew 1% to nearly 4.7 million, but subscriber churn was 11.7%, up from 11.1% a year ago.

In a statement to ABC Australia, Telstra said while it acknowledged its partner was exploring options for their cable TV venture, there was no certainty the review would "result in a transaction or other strategic change."

Telstra's Foxtel holding was worth AU$388 million ($255 million) in June last year, down 3% from the previous year and implying a AU$1.1 billion valuation for the asset.

News Corp. isn't the only legacy media giant grappling with the decline of cable this week.

Paramount and Warner Bros Discovery have written down the value of their cable channels by $6 billion and $9 billion respectively in the last two days, FT reports. Some 2.4 million US households cut the cord on their pay-TV service in the first quarter – the highest on record.

News Corp's ASX stock rose 2.8% in Friday trading. Telstra shares closed 0.26% higher.