News Corp is in "active discussions" over the future of Foxtel as the media group looks at ways to free the full value of all its assets.
CEO Robert Thomson has long been pointing to the value of the company being underestimated by the market, despite a 38% rise in News Corp's share price over the past year.
"We continue to examine changes to maximise our overall value for shareholders," he told analysts during a briefing.
"It is true to say we are in active discussions over the future of Foxtel, and we believe all who have studied the worth of our individual assets and our current share price can easily see that that price does not reflect the collective value of our businesses."
Thomson said the most glaring discrepancy is how the market has assessed the value of online real estate classified business REA.
Lachlan Murdoch, the current chair of News Corp, made an early investment of less than $US2 million in REA, a strategic stake that has become a 61% share in a company worth $AUD31 billion based on recent trading.
"If you need me to do the math, 61% of 31 billion Australian dollars is approximately 12.5 billion US dollars. Given that our market cap is roughly 17 billion US dollars, that means that Dow Jones, including the Wall Street Journal and the lucrative B to B businesses, plus Harper Collins, plus Realtor, plus the Times of London and the Sun, plus our UK Radio Network, plus our Australian papers, plus Foxtel and a few other companies, are apparently perceived to be worth less than $5 billion which we believe simply defies investing or mathematical logic," Thomson said.
In August, News revealed in a “significant overture” for Foxtel.
The value of Foxtel could be somewhere near $2 billion, depending on the interests of the buyer and whether or not synergies are available.
Foxtel revenue was up 3% to $US501 million in the September quarter, driven by Kayo and BINGE from increases in both volume and pricing.
News Corp's latest results show Foxtel streaming subscription revenues representing 34% of circulation and subscription revenues in the quarter, up from 30% in the prior year.
As of September 30, Foxtel’s total paid subscribers were more than 4.6 million, a 1% increase, driven by growth in Kayo and BINGE subscribers, partly offset by fewer residential broadcast subscribers.
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