Sky the limit for Seven and News

Kerry Stokes’s Seven West Media and Rupert Murdoch’s News Corporation may jointly own Sky News Australia.

Seven Group executive chairman Kerry Stokes

Kerry Stokes’s Seven West Media and Rupert Murdoch’s News Corporation could end up jointly owning Sky News Australia, with Seven expected to retain its shareholding in the subscription TV news channel, even in the event of a News takeover.

News has been stalking Sky’s parent, the Australian News Channel, for more than a year and had been expected to buy out the company’s three shareholders, Seven, Nine Entertainment Co and BSkyB, owned by Mr Murdoch’s global broadcasting giant, 21st Century Fox.

But it’s understood Seven is now keen to retain its stake in Sky and would be prepared to invest alongside News in the channel’s expansion.

News believes Sky could benefit from more investment after years of being run on a shoestring, and has flagged its intention to bulk up the channel’s budget.

Seven would not be forgoing a big payday to retain its exposure to any potential upside, given Sky’s price tag is expected to be about $30 million.

Mr Stokes has long been interested in subscription television. He oversaw Seven’s foray into subscription TV through the C7 sports channel, which was carried by the Austar and Optus Vision pay-TV networks before it was shut down. Stokes’s Seven Group Holdings considered a bid in 2012 for the shares it did not already possess in Consolidated Media Holdings, which owned 25 per cent of Foxtel, but the competition watchdog said it would block any bid from Seven.

A deal between News and Seven would be the latest step in the warming relationship ­between two of Australia’s most influential media companies.

It’s a relationship that has gone full circle after the two companies were on opposing sides in the mega-litigation brought about by Seven in 2002 around the circumstances that led to C7’s demise.

News Corp’s half-owned subscription TV group Foxtel is partners with Seven in streaming venture Presto, while Nova Entertainment, owned by News co-chairman Lachlan Murdoch, has run the Radio X Factor program, which features talent from Seven’s X Factor talent show, for the past two years.

News is also in talks with Seven about selling The Sunday Times newspaper in Western Australia to the Stokes-controlled group, which owns the state’s only metropolitan daily, The West Australian. Those negotiations have reached an advanced stage, and a deal could be reached in coming weeks.

A Sky News sale appeared imminent when News began high-level due diligence in November, but the progress was halted, partly because key players had bigger matters at hand.