News Corporation is looking to sell pay TV giant Foxtel as the industry faces a new wave of corporate consolidation, according to experts.

News Corp chief executive Robert Thomson revealed Foxtel was on the selling block in a call with investors on Friday, saying the decision had come after a “strategic review” of the brand.

“That review has coincided recently with third-party interest in a potential transaction involving the Foxtel Group, which has been positively transformed in recent years,” Thomson said.

“We are evaluating options for the business with our advisors in light of that external interest.”

Experts said that it’s an attractive time for News Corp to cash out of Foxtel after investing in modernising the business, which it owns in partnership with Telstra, over the past decade.

Victoria University senior lecturer Marc C-Scott said Foxtel “reinvented itself” with Binge and recently Hubbl, putting them on more stable footing after disruption from the likes of Netflix.

“It becomes a more enticing deal within that bundle structure,” he said.

But nevertheless, things are about as good as they’re going to get for Foxtel as they struggle with increasingly tough competition, said University of Sydney associate professor Tim Dwyer.

“There’s been a shift away from peak Binge [and] frankly this hasn’t been the best performing part of the News Corp business for many years,” Dwyer said.

“The writing is on the wall.”

‘Cashing out’

At one point Foxtel reached almost a third of Australian households with its Pay TV business, but those days are long gone since the arrival of Netflix and streaming.

Its business was hugely disrupted by online content consumption, with traditional PayTV customers ageing out of the market.

Dwyer said that the market has evolved more into competition for the time of a younger consumer base that uses YouTube, TikTok and Instagram for entertainment.

Foxtel has adapted by launching its own streaming platforms, including Kayo and Binge, and more recently aggregating such services with its latest business venture Hubbl.

But aside from having much thinner profit margins than its traditional business, streaming is also much more competitive, with Netflix, Stan, Disney+, Paramount Plus and Amazon.

Soon even HBO, which currently licenses local distribution of popular shows like House of the Dragon to Foxtel, will launch in Australia, threatening to directly cut into News Corp’s business.

Queensland University of Technology professor Amanda Lotz said there are ultimately “too many” payTV products to be sustainable.

“The Australian market isn’t very big; it seems unlikely to be able to sustain two domestic-online general entertainment services (Stan and Binge),” Lotz said.

“This might be attractive to News Corp as a way of cashing out of a sector that is somewhat distinct from where many of the News Corp holdings are [in newspapers],” Lotz said.

Interest in Foxtel

While the buyer for Foxtel is unknown, Lotz suggested it could be a company with an existing streaming business that wants to expand.

Dwyer and C-Scott both speculated that one of Australia’s free-to-air broadcasters might be best placed to make a bid for the company.

That could include Nine, which Dwyer said could potentially “slice and dice” Foxtel into its existing on-demand streaming business.

C-Scott said Seven, which doesn’t have its own subscription streaming platform, could potentially look at Foxtel.

They would have the benefit of holding existing rights to programs and sporting events that could underpin Foxtel’s digital platforms.