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Pay TV merger possible?

Media analysts predict a future merger between Foxtel and Austar is inevitable.

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“We believe a merger/acquisition of Foxtel and Austar is inevitable,” JPMorgan’s media analyst, Laurent Horrut has said in research note to clients.

The slowdown in consumer spending and the threat of a prolonged advertising recession has renewed speculation of a merger between the pay-TV companies. That news might just be enough to give some glimmer of hope to some Austar subscribers who are unhappy with aspects of their service, including dwindling channels, and problems with the MyStar PDR.

The Sydney Morning Herald notes the most likely scenario would involve Foxtel taking over its regional counterpart, with a combination of the two businesses expected to wield cost savings of about $75 million.

Takeover talks between the two companies collapsed in May last year when Telstra – which owns half of Foxtel – refused to cough up more than $1.80 a share for Austar, which is controlled by John Malone’s US media group, Liberty Global. Liberty reportedly wanted $2 a share for the company. Since then Austar’s share price has fallen by two-fifths to close yesterday at 79.5c.

However, a deal would still be some time off: both companies were likely to seek to become “more mature cash-flow generators” in their own right before slashing costs in such a move, Horrut said.

Source: Sydney Morning Herald

5 Responses

  1. I think – although I’m not certain – that like free TV licences, that Pay TV licences are not national – but Austar, Foxtel & Optus have bid and bought the licences for ceratin areas.

  2. The quicker the better I say,bring it on. I have been a Austar customer since pay tv was introduced in Australia, it was in the old CETV days,does anybody remember when Austar was CETV?
    I am very unhappy with Austar, please let me and my family have Foxtel.

  3. Can anyone explain to me why Austar can’t sell its product in metro areas and vice versa? Even though they are basically selling the same product, wouldn’t some healthy competition be good for us consumers? I guess if this goes through it won’t really matter anyway.

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