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News Corp., Telstra agree on Foxtel-Fox Sports merger

News Corp. and Telstra Corp. Ltd. signed definitive agreements to combine Foxtel and Fox Sports Australia Pty. Ltd. into a new company.

News Corp. will own 65% of the merged entity, while Australian telco Telstra will hold the remaining 35%, according to a March 5 filing.

News Corp. said it will incorporate the merged entity into its financial statements and appoint four directors, including the chairman, to the new company's board and senior executives. Two directors will be appointed by Telstra.

The new company will focus on livestreaming products and an expanded library that includes "Australian written, produced and directed programming."

"Telstra will be the exclusive telco sales agent for the combined entity on mobile and IP products and we will continue with our broadcast reseller arrangements," Telstra CEO Andy Penn said in a statement.

News Corp. expects to record pretax noncash impairment charges and write-downs in the quarter ending March 31 in the range of US$700 million to US$1.1 billion for its investment in Foxtel and long-lived assets at FOX SPORTS Australia.

News Corp. cited "lower-than-expected sales of certain new products and broadcast sales at Foxtel" for its revised outlook for Foxtel and Foxtel Sports Australia.

News Corp. and Telstra first announced their merger plans for Foxtel, which the companies jointly own, and Fox Sports Australia in August 2017. The Australian Competition and Consumer Commission approved the deal in December 2017.

The development comes after the proposed merger secured the approval of the Australian Competition and Consumer Commission in December 2017.