Shares of News Corporation Ltd (ASX: NWS) have surged by 9% following the company’s announcement that it is considering the sale of its Foxtel division. This boost in share price comes after the release of the company's FY24 results, which highlighted a positive shift in its strategic direction.
Foxtel Sale Announcement
Foxtel, an Australian pay TV platform, is jointly owned by News Corp (NASDAQ:NWSA), which holds a 65% stake, and Telstra Corporation Ltd (ASX: TLS), which owns 35%. The decision to explore the sale of Foxtel follows a comprehensive nine-month strategic review conducted by News Corp.
This move comes at a time when News Corp's FY24 results have shown notable performance metrics. The company reported a 2% increase in revenue to US$9.88 billion, largely driven by a 21% rise in revenue from its ASX-listed subsidiary, REA Group Ltd (ASX: REA). Net income also saw a significant 89% increase, reaching $354 million.
Impact and Future Prospects
Foxtel’s transition towards streaming services has been a key driver of its revenue growth. The platform's streaming subscription revenues now account for 30% of its total subscription revenues, up from 27% the previous year. Foxtel's subscriber base grew to 4.7 million in FY24, representing a 1% increase from the prior year.
The potential sale of Foxtel could have considerable implications for Australia’s media landscape, especially given Foxtel's strong presence in pay TV and its sports broadcasting rights, including partnerships with the National Rugby League (NRL) and the Australian Football League (AFL).
News Corp has indicated that it has received interest from third parties regarding the Foxtel division. The company is evaluating various strategic and financial options for the business, although there is no certainty about the timing or outcome of any potential transactions.
Management's Comments
News Corp CEO Robert Thomson emphasized the importance of thoroughly assessing any interest in Foxtel to maximize returns for shareholders. Thomson expressed confidence in the company’s long-term prospects and highlighted the ongoing review of its portfolio with the aim of optimizing shareholder value.
The consideration of a Foxtel sale represents a strategic opportunity for News Corp to potentially unlock significant value. While the impact of such a transaction on News Corp’s share price and the broader media market remains to be seen, investors have responded positively to the news.
As with any potential strategic move, it will be important for investors to stay informed and conduct thorough research to understand the full implications of any developments.