News Corp closes in on Sky News Australia purchase

News Corp is on track to buy Sky News Australia before Christmas as negotiations with shareholders progress.

News Corporation is on track to buy Sky News Australia before Christmas, after negotiations progressed with the pay-TV service’s shareholders, Seven West Media, Nine Entertainment co and Sky Europe.

It is understood Sky’s parent company Australian News Channel has allowed News, publisher of The Australian, to begin high-level due diligence in recent days.

This process will involve examining key contracts and legal details and is expected to be wrapped up within a month.

Negotiations between News and the shareholders have become more amicable in recent weeks, after they had stalled earlier this year.

News is believed to have moved slightly from its original offer price but it will not budge again.

The company plans to invest more heavily in Sky, which had previously been a low-cost operation, while also integrating the service with titles such as The Australian.

Negotiations reached a gridlock in February and News even considered launching its own alternative satellite news service to run on its half-owned Pay-TV platform Foxtel.

Nine wrote down the value of its 33.3 per cent stake in Australian News Channel at its full-year result in August due to uncertainty around the renewal of ANC’s contract with Foxtel.

The contract, which expires in 2017, sees Foxtel pay ANC a subscriber fee in return for carrying the service on its platform.

ANC’s value would diminish if it was dropped from the Foxtel platform.

Nine chief executive David Gyngell said in February News’ offer “ did not represent fair value”.