Rupert Murdoch’s News Corp made a bid $2bn to double its stake in the largest pay-television channel in Australia.
Rupert Murdoch's News Corp is changing its focus in Australia. Photo: Getty Image
If accepted, this bid would raise News Corp's stake in Foxtel to 50 per cent. This domination of the network comes alongside a decision to cut investment and jobs in News Corp's newspaper department. There will be slashes to 70 per cent of the corporation’s newspaper divisions, leading to an unspecified number of job losses.
This change in focus in Australia follows News Corp's model in the UK and the USA, where pay-television networks already outweigh the newspaper divisions of the company. It also follows the example of News Corp's largest competitor, Fairfax Media Ltd., which announced on Monday that it would be cutting 1900 newspaper-based jobs.
The expansion of the more profitable pay-television network will accompany an online expansion. The investment will give Murdoch’s News Corp. sole ownership of Fox Sports in Australia, which, having won the broadcasting rights to the most popular games in the Australian Football League and the Australian Rugby League, is set to dominate Australian sports broadcasting in the next ten years.
This bid represents an offer of A$3.50 per share, 14 per cent higher than Tuesday’s closing price. James Packer, who currently owns 50 per cent of Consolidated Media is willing to back the bid despite having previously stated that he sought an offer of A$4 per share for a sale. Packer’s willingness to accept a lower bid comes mainly from his need for cash holdings in order to expand the casino business which he inherited from his father in 2005.
The bid is subject to approval by both the board of News Corp and the board of Consolidated Media. News Corp are unlikely to encounter any internal problems, as the company has been looking for new investments following the pull-out from their $12bn-plus British Sky Broadcasting takeover bid in 2011. The takeover may encounter resistance from the other large shareholder in Consolidated Media, Kerry Stokes, who may hold out for a higher bid.
The Australian Competition and Consumer Commission is reviewing the offer, with a final submission to be finalised by 11th July. They will deliver their findings on 2nd August. The bid is unlikely to encounter regulatory opposition.
A News Corp spokeswoman declined to comment on whether it would seek to acquire more than 50 per cent of Foxtel in the future, should the bid go ahead.