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News Corp. and Telstra’s Foxtel to Merge With Fox Sports Australia

Foxtel and Fox Sports Australia are set to be combined into a new premium pay-TV sports and entertainment company Down Under, a move designed to pave the way for an eventual IPO.

Parent companies Telstra and News Corp. announced the merger Thursday, saying the combined entity would align ownership and management and offer Australian consumers greater choice. The companies aim to complete the transaction in the first half of 2018, subject to the necessary regulatory approval.

News Corp. CEO Robert Thomson said the proposed restructuring of the two companies would “unlock value for News Corp. shareholders and provide a clearer vision into the depth and strength of our Australian assets.”

“The new structure will simplify management control and ensure that the company is best placed to leverage the skills of its talented Australian employees and program makers,” Thomson said in a statement. “There is no doubt that the world of content is becoming more complicated and competitive, and it is important that Australia has a strong local platform for its great sports and for homegrown creativity, as well as a showcase for international programs.”

Under the arrangement News Corp. will hold a 65% share in the new company, with Telstra taking the remaining 35%. News Corp. will select its chairman as well as the majority of its board and senior executives.

Pay-TV company Foxtel was set up as a 50-50 joint venture between News Corp. and Telstra in 1995. That same year, News Corp. launched Fox Sports Australia, which was originally called the Premier Sports Network.

The new company will aim to deliver premium sports as well as original Australian and international entertainment. It will invest in new Australian programming, written, directed and produced by local talent, as well as continue to invest in premium international content and new technology to match consumer demand. This includes delivering a range of innovative products and packages available across different devices and platforms.

“More people are watching more media on more devices for more hours every day of the week, so the demand for media and for content is only going to grow,” said Andy Penn, CEO of Telstra. “With a strong premium content proposition and scale subscriber base, the new company will be well positioned to deliver a compelling customer experience.”

The new company will also expand distribution channels for the sale of Foxtel and Fox Sports products, intended to deliver improved operating efficiencies across the combined businesses.

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