News Corp. to Buy Out ESPN's Stake in Asian TV Venture
UPDATED: Rupert Murdoch's conglomerate will take full control of ESPN Star Sports as it continues to streamline its global holdings.
LONDON -- Rupert Murdoch's News Corp. and the Walt Disney Co.'s ESPN said Wednesday that they have reached a definitive agreement for a News Corp. unit to buy out ESPN’s 50 percent stake in Asian joint venture ESPN Star Sports.
Financial terms weren't disclosed, but an analyst estimated that News Corp. likely paid about $250 million. News Corp. has been looking to streamline its global holdings by either buying full control of or selling businesses that it doesn't fully control.
"The transaction will allow News Corp. units to own and operate all of the ESS businesses, while providing ESPN more independence and flexibility in future support of the Walt Disney Co.’s overall efforts in Asia," the companies said in a statement.
Star is News Corp.'s Asian pay TV arm. The long-running joint venture with ESPN, based in Singapore, operates 17 networks in five languages that use the ESPN and Star Sports brands throughout Asia.
Sources said that News Corp. will continue to use the ESPN brand for the business and some of its networks for an unspecified period before phasing it out. It wasn't immediately clear what name it would use for the business and its current ESPN-branded channels.
An ESPN spokeswoman said that the companies decided to go their own ways, with ESPN remaining committed to the Asian market with a near-term focus on its digital properties.
For the period of Jan. 12-April 12, ESPN said it averaged more than 756 million page views per month to its sites and apps in the Asia Pacific region.
"News Corp.'s acquisition of the interest of ESS that we did not already own continues the program of simplifying our operating model, consolidating our affiliate ownership structures and furthers our commitment to delivering incredible sports programming to consumers across the globe, and particularly enhancing our position in sports programming in emerging markets,” said News Corp. deputy COO James Murdoch, who also serves as chairman & CEO international at his father's conglomerate.
In that role, the Murdoch son has been focusing his attention on the international TV portfolio at News Corp.
“After 16 years jointly managing ESS, we have decided to independently pursue future opportunities in Asia,” said John Skipper, president of ESPN and co-chairman of Disney Media Networks. "We are extremely proud of our role in building ESS into what it is today, and now with the growing digital landscape in Asia, we look forward to continuing to serve Asian sports fans through ESPN-branded digital businesses like ESPNCricinfo, the leading digital cricket brand in the world, ESPNFC and ESPN Mobile."
Manu Sawhney, who has overseen ESS as managing director of ESS, will leave the company. Peter Hutton, currently senior vp sports at News Corp.'s Fox International Channels, will take over the role after a transition period.
The transaction is subject to regulatory approvals.
Davenport & Co. analyst Michael Morris estimated the value of the 50 percent stake at $250 million and said it would be "relatively immaterial to near-term profitability." But he said, "We see this as a high-potential asset."
During the past year or so, News Corp. also has acquired unconsolidated stakes in the Fox Pan American Sports TV networks business, while selling its Eastern European outdoor arm, MySpace and a stake in pay TV software company NDS. "We estimate that the largest remaining unconsolidated private equity stakes are in Fox Sports Australia (about $1 billion) and Foxtel (about $500 million)," Morris said.