After months of speculation, it is finally confirmed. Kim Williams’ Foxtel is to bid for regional Pay TV player Austar. Pay TV is about to get consolidated.
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Cable TV giant Foxtel has announced its intention to acquire 100 per cent of the regional player for $1.52 per share and merge the two.
The merger, if it gets the green light, “would bring together two of Australia’s major subscription TV service providers … with anticipated revenues of over $2.8 billion,” Foxtel said today.
And its owners Telstra, Rupert Murdoch’s News Ltd and Consolidated Media Holdings must be rubbing their hands in delight at the prospect as it gives the giant an additional 760,000 subscribers in a time when getting new subscription signs ups is proving tough.
In March, Williams admitted at a Pay TV conference that growth had been “dreary” over the past 18 months in the advent of free TV services.
Austar, the largest pay television operator in regional Australia and Foxtel’s biggest pay rival also has a mobile and broadband division.
Foxtel also reckons the merger will help its customers by “giving regional Australia access to the same digital services as their metropolitan counter parts” as well as faster service rollout and better deals.
“This is a logical transaction with significant consumer and industrial upside for all stakeholders. The two companies are a complementary fit,” said Kim Williams today.
Austar CEO, John Porter has previously gone on record as voicing his support for the deal, declaring there was “so much compelling industrial logic” to a merger deal with Foxtel.
However, it’s not all done and dusted and “there can be no certainty that any transaction will eventuate” Foxtel warned today as it is subject to approval from the Board of AUSTAR and shareholders.
The transaction would be funded by FOXTEL bank debt and shareholder capital contributions.
Foxtel is being advised by AquAsia, UBS AG and Allens.