The share prices of Telstra Group Ltd (ASX: TLS) and News Corporation (ASX: NWS) are in focus after the sale of Foxtel.
Both Telstra and News Corp are shareholders in the Foxtel business. Telstra owns 35% of the media business and News Corp owns 65%.
Telstra and News Corp sell Foxtel to DAZN
News Corp recently initiated a strategic and financial review of Foxtel, which has culminated in the sale of Foxtel to DAZN.
Both Telstra and News Corp will be selling their entire shareholding.
Telstra will receive $128 million in cash for repayment of shareholder loans and will hold a 3% holding in DAZN. The transaction is not expected to have a material impacted on Telstra’s FY25 guidance or profit and loss for the current financial year, being FY25.
Telstra said it has maintained a minority investment in Foxtel after the combination with Fox Sports in 2018 and has “welcomed the transformation of the Foxtel business in recent years with new streaming offerings including Kayo and Binge.”
For News Corp, it will receive A$578 million cash repaid for shareholder loans and it will have a 6% stake of DAZN, as well as one seat on the board of directors.
This deal will allow News Corp to focus on segments like Dow Jones, digital real estate services and book publishing.
And the shareholding of DAZN could also benefit News Corp and Telstra shares. It’s a large, global sports streaming and entertainment company with over 300 million viewers across 200 markets. DAZN “continues to experience significant growth as it pursues expansion into new markets and across more sports”. It sounds like an appealing business to me.
Telstra thinks the sale of Foxtel “represents an opportunity for the continued evolution of Foxtel’s digital-first sports and entertainment offering within a global platform.”
Completion of the deal is expected in the first half of 2025, subject to regulatory approvals.
Management commentary
The Telstra CEO Vicki Brady said:
Now is the right time for this change. Foxtel is a world-class streaming service, and I look forward to its continued success under DAZN’s ownership.
Final thoughts on Telstra shares
This seems like a good outcome for Telstra shares (and News Corp), giving the business the potential to recover cash and own a piece of a much more compelling business.
I think Telstra is a good business to own and it’s one of the ASX dividend shares I’d be happy to buy for the long-term.
