Merger mooted for Foxtel-Fox Sports

Australian pay-television operator Foxtel and pay-television broadcaster Fox Sports could be merged under a deal reportedly being discussed by the former’s equal shareholders, telecommunications firm Telstra and media group News Corp.

The Sydney Morning Herald newspaper said the merger could pre-empt a multi-billion dollar initial public offering of most of Telstra’s stake in a combined pay-television operator in the second half of 2016.

The Australian Financial Review newspaper added that Telstra has indicated to News Corp, which owns 100 per cent of Fox Sports, that it is seeking to integrate Fox Sports into Foxtel ahead of floating 60 per cent of the telco’s stake in the pay-television operation.

The Herald added that News Corp, which is being advised by Goldman Sachs and Citi, is understood to be open to the idea, but there is no guarantee that a deal or an IPO is agreed.

The newspaper said several different potential structures are being discussed for a merger of Foxtel and Fox Sports. These include Foxtel buying Fox Sports outright, or Fox Sports being folded into Foxtel with Telstra either paying a balancing payment and getting 50 per cent of the combined entity, or paying nothing and securing a reduced stake in the combined operation.