Major 'growth opportunity' ahead; Foxtel, Fox Sports merger given green light

Arvind Hickman
By Arvind Hickman | 7 December 2017

Australia's competition watchdog the ACCC has given the proposed merger between Foxtel and Fox Sports the green light, explaining that it didn't believe the transaction would lessen competition in the acquisition of sports broadcasting rights.

The combination will have little effect in the way the two businesses operate, but will change the balance of equity in Foxtel between 50/50 joint-owners News Corp and Telstra.

News Corp, which owns Fox Sports, will see its equity in Foxtel rise to 65% and Telstra's share will reduce to 35%.

Foxtel boss Peter Tonagh says the merger between Foxtel and Fox Sports will help the two businesses better align strategically to help the pay TV company grow its sports coverage.

Tonagh recently told AdNews the merger is designed to better align the two businesses at an ownership level to help drive growth.

“This is not a merger based on making massive cost savings, it's a merger based on growth opportunity,” he said.

Although there is no friction between the way the two companies operate on a day-to-day basis, separate ownership structures can create some inefficiencies in how well aligned they are strategically.

“We are not 100% aligned at an ownership level with two sets of shareholders and it would be more efficient to run a business when the shareholders are completely aligned with what we are trying to achieve,” Tonagh said.

“If you think about what happens in a merger like this, sport will become a fixed cost to Foxtel and when you've got a fixed cost you tend to grow faster.”

As part of the deal Telstra will become the official telco agent of Foxtel's digital products.

The merger of Foxtel and Fox Sports is planned to precede a multibillion-dollar stock listing that will provide more capital to Foxtel to help the pay TV company better compete with global content companies Netflix and Amazon, as well as social media giants Facebook and Twitter, which have been circling sports rights deals across the world.

Last month With Collective said it resigned from Optus for a place on the Foxtel roster handling the brand's customer marketing portfolio. The agency now leads customer and acquisition marketing, retail, data and digital communications for Foxtel.

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