The chief executives of Foxtel’s two shareholders have both dismissed speculation about corporate deals involving the pay TV platform despite fielding an unsolicited approach for the business last year.
The Sydney Morning Herald and The Age revealed last year that a “blank cheque” vehicle led by US cable television industry veteran Leo Hindery approached Rupert Murdoch’s News Corp and Telstra with a US$2 billion investment proposal. But the offer was rejected.
Mr Hindery’s special purpose acquisition company (SPAC), Trine Acquisition Corp, was on the hunt for an Australian media investment, according to sources who could not speak publicly for confidentiality reasons. But Foxtel was the only company to receive an offer, the sources said.
As recently as 2019, both Telstra and Foxtel had openly discussed the possibility of floating the pay TV company on the ASX. Telstra was widely expected to sell down its stake into any sharemarket listing, but the plans were shelved when Foxtel’s performance deteriorated.
Now amid surprising signs of a recovery, both Telstra and News Corp say they are committed to the business. “[The SPAC deal was unsuitable] because we’re very happy with our investment in Foxtel and it will always continue to be the case for all of the reasons that we highlighted,” Telstra CEO Andy Penn told this masthead. “It continues to amuse me a little bit why people don’t see that.”
Last week, Foxtel reported a 77 per cent rise in earnings and an increase in subscribers to a record 3.3 million as part of News Corp’s strongest quarter in at least seven years. Analysts attributed the strong result to aggressive cost-cutting.
News Corp chief executive Robert Thomson downplayed the approach for Foxtel and said the business was now on a strong footing.
“Let’s consider how the Foxtel narrative has changed,” Mr Thomson said. “The questions we were being asked a couple of quarters ago were whether we needed to put extra capital into Foxtel and then we were asked whether some SPAC wanted to buy it – more SPAC-ulation than speculation,” he told analysts.
“The truth is that the successful development of the business has given us real options. Our immediate task and the team’s task is to keep driving the business to keep striving,” he said.
Separately last week, in a major strategic shift, Telstra said it would no longer stream AFL and NRL matches live on its own apps and instead put its muscle behind Foxtel’s Kayo Sports offering.
Mr Penn said the telco’s 35 per cent stake put in an envious position compared to Telstra’s global peers.
“I obviously have a lot of engagement with telcos globally and they look at our position enviously because a lot of telcos are either in a dilemma where they’ve either got to go out and buy a media company (which AT&T did with DirecTV) or they go direct and buy the content directly but then they’ve got to invest in the production of it,” Mr Penn said.
Foxtel has faced significantly uncertainty in recent years.
The once dominant pay-TV company has over $1 billion in debt and has faced fierce competition from offshore streaming giants such as Netflix and Amazon Prime and local players such as Stan, which is owned by Nine Entertainment Co, the owner of this masthead.
The temporary suspension of sport due to the COVID-19 pandemic forced the renegotiation of several broadcast deals with codes such as the NRL and AFL and multiple redundancy records.
News Corp announced last year it would stop putting money into Foxtel and wrote down its shareholding by $1.4 billion. Telstra, which gave Foxtel a $170 million loan last February, also wrote down its stake by $300 million to $450 million.
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Source: Thanks smh.com