MELBOURNE--News Corp. (NWS) is set to increase its presence in
Australia's subscription-television market after Consolidated Media
Holdings Ltd. (CMJ.AU) shareholders approved its 1.94 billion
Australian dollar (US$2.01 billion) bid for the company.
The deal will see News Corp., owner of The Wall Street Journal,
double its stake in Australian subscription-TV provider Foxtel to
50%, and gain full ownership of sports-channel Fox Sports.
Australia's largest telephone company Telstra Corp. (TLS.AU) owns
the remaining 50% of Foxtel.
The deal has to go to Australia's Federal Court for approval on
Friday, something investors see as a formality, before being
completed on November 19.
Foxtel and Fox Sports are to be included, along with News
Corp.'s Australian newspaper assets, in the company's publishing
arm--which is being split from the entertainment businesses that is
to include other broadcasting networks, as well as film and TV
production studios.
Foxtel, which last reported A$2.2 billion in annual revenue,
will be an important earner for the publishing business at a time
when newspaper readership is declining as consumers switch to
digital platforms.
Angus Gluskie, managing director of fund manager White Funds
Management, which holds News Corp. shares, said he looked forward
to Foxtel's inclusion in the publishing business.
"It's important for them (News Corp.) to have a very dominant
offering across that media space," he said.
Foxtel is Australia's largest subscription-TV provider and
earlier this year bought rival Austar in a deal valued at A$2.5
billion.
Foxtel had 2.3 million households signed up to its service as of
June 30 in a country where pay-TV penetration is only 26%,
according to Citigroup research--well behind countries like the
U.S. and Germany.
News Corp.'s Australian arm, News Ltd., said in a statement
Wednesday that it welcomed the vote by Consolidated Media
shareholders to support the takeover.
There was little doubt about the outcome given Consolidated
Media's two largest shareholders already backed the deal. James
Packer's Consolidated Press Holdings Ltd. owns 50.1 of Consolidated
Media, while Seven Group Holdings Ltd. (SVW.AU), owned by fellow
billionaire Kerry Stokes, has 25%.
The deal follows a A$3.45-a-share bid by News Corp. for
Consolidated Media in September, lower than an original non-binding
proposal of A$3.50 made in June. Consolidated Media's shares closed
at A$3.43 in Sydney on Wednesday, while News Corp. ended up 0.3% at
A$23.66.
While Consolidated Press Holdings was an early supporter of the
takeover, Seven Group came on board only this month when the
Australian Competition & Consumer Commission, or ACCC, rejected
its own proposal to take over the whole of the company.
The ACCC said at the time it was concerned about the impact on
competition in the free-to-air TV market if Seven Group--which owns
33% of broadcaster Seven West Media Ltd. (SWM.AU)--took over
Consolidated Media.
The decision sent a message that the regulator was uneasy about
deals that combine pay-TV and free-to-air broadcasting assets.
Write to Gavin Lower at gavin.lower@wsj.com
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