Billionaire-backed sports streamer buys Foxtel

News Corp-controlled pay TV and streaming company Foxtel has been sold to DAZN, a sports streaming platform controlled by one of the world’s richest people, for an enterprise value of $3.4 billion.

News Corp will hold a minority (6 per cent) equity interest in DAZN and gain a seat on the company’s board of directors, it said in a statement to the market. Foxtel’s current debt will be refinanced, while News Corp and Telstra’s loans to the company of $578 million and $128 million, respectively, will also be paid off.

DAZN is backed by British-Ukrainian billionaire Len Blavatnik.Credit: Getty Images

Telstra has also agreed to sell its minority interest in Foxtel and take a 3 per cent stake in DAZN. The proposed deal places Foxtel at an enterprise value of seven times its 2024 EBITDA.

The deal is subject to regulatory approval and is expected to be completed in the second half of fiscal 2025. If approved, it would become one of the most influential media companies in Australian history and broadcaster of the nation’s favourite sports including the AFL, NRL and cricket.

News Corp chief executive Robert Thomson said the agreement was a victory for the company’s shareholders, DAZN and Australian sports fans. DAZN boss Shay Segev said the British firm is committed to supporting and investing in the company’s television and streaming services across sports and entertainment.

“Australians watch more sport than any other country in the world, which makes this deal an incredibly exciting opportunity for DAZN to enter a key market, marking another step in our long-term strategy to become the global home of sport,” Segev said.

Foxtel broadcasts Australia’s two biggest codes, the NRL and AFL.Credit: Artwork by Marija Ercegovac

DAZN’s majority shareholder is Access Industries, Soviet-born Sir Len Blavatnik’s investment vehicle. Blavatnik is a British and American citizen.

While Blavatnik has put billions into DAZN’s rapid expansion, his payments to DAZN fell by 67 per cent in 2022 to $US230 million.

Last week, a senior executive within the Saudi Arabian Public Investment Fund told this masthead it is likely to take a stake in DAZN in the future. The PIF has previously been rumoured to be taking a $1.57 billion stake in DAZN.

While DAZN is expected to post its 2023 calendar year results later this month, the company posted losses of $US4.1 billion ($6.4 billion) in the three years to December 2022, raising questions over the financing of the Foxtel deal.

Access Industries also has significant stakes in music giant Warner Music Group, French music streaming platform Deezer and independent film house A24.

Foxtel chief executive Patrick Delany (centre) and Foxtel streaming and advertising chief Julian Ogrin (left) arrive at Lachlan Murdoch’s Christmas party this month.Credit: James Brickwood

DAZN is one of the few purely sports streaming firms, with a global presence and one of the largest sports streaming firms in Europe. However, it is comparatively small in Australia and has a presence in 200 markets worldwide.

While it is unclear whether DAZN will merge Foxtel’s Kayo with its existing platform in Australia, it immediately makes it the largest player in domestic sports streaming. It also takes over Binge, the entertainment streaming service with 1.5 million paying subscribers. Kayo has more than 1.5 million subscribers, while the legacy set-top box business has more than 1 million customers, but they are in structural decline.

Segev said he and his team look forward to working closely with Foxtel boss Patrick Delany.

A year ago, Segev outlined DAZN’s vision to become the global destination platform for global sports fans, akin to Spotify or Netflix in their respective markets, and to fix the fragmentation of sports consumption.

DAZN has built up its subscriber base by purchasing rights to major competitions in Western Europe, in particular football rights packages in France, Germany, Italy and Spain.

It is yet to crack the largest market in England, however, with most of its presence around boxing. It failed in a 2022 bid to purchase BT Sports, a pay TV group in Britain that would have given it access to one of the English Premier League’s lucrative rights packages.

While DAZN will get access to broadcast rights for the AFL, NRL, cricket, Supercars and other major international sports, it will also have to decide what to do with Foxtel’s other assets.

One of those is its streaming aggregation business Hubbl, which the company spent about $200 million launching this year.

Foxtel has long-term deals with AFL and cricket until 2031, while the NRL is looking to secure a new broadcast rights deal beginning in 2027. The deal will leave questions over how committed the British company is to domestic Australian sport, with many of Foxtel’s rights deals central to the funding of sport in Australia, in particular with Cricket Australia, the NRL and AFL.

DAZN, which broadcasts the NFL, MMA and UEFA Women’s Champions League in Australia, emerged as the likely buyer for Foxtel after talks broke down between News Corp and US private equity firm Platinum over the former’s unrealistic asking price.

Should DAZN receive investment from the PIF, it would give Saudi Arabia greater influence in major markets, including some of Europe’s largest economies, and Australian sport. The PIF has already poured billions of dollars into sport, including Formula 1, which will begin its new season in Melbourne next year, while its LIV Golf tournament hosts an event in Adelaide.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.