News Corp to spin off Net media units
- — 22 June, 2000 17:16
The new company, Sky Global Networks, brings under one roof News Corp's far-reaching pay-television services, which have 85 million customers worldwide. The services include satellite-distribution operations Star TV in Asia and BSkyB in Britain.
Those systems would form the basis for the company's ambitious Internet strategy. Via set-top boxes and other distribution systems, Sky Global hopes to create a worldwide interactive system where subscribers can do their shopping and banking, send e-mail and play games, as well as just watch TV.
Sky Global also will include the company's equity interest in TV Guide and NDS Group, which makes set-top box software. For the nine months ended March 31, Sky Global said it took in revenue of $295 million, compared to $670 million a year earlier, when News Corp's magazines were part of the unit.
News Corp said the move would help it dominate digital-interactive multimedia services throughout the globe, as well as unify its management teams to enhance its strategic planning. It would also put Sky Global in a better position to form strategic alliances.
"From an operational standpoint, as far as someone looking to do business with News Corp on an Internet-related venture, it's better to have this isolation," says Dylan Brooks, an analyst with Jupiter Communications.
News Corp expects the IPO to be completed before the end of the year, but declined to comment Tuesday on its filing with the Securities and Exchange Commission.
In the company's filing with the SEC, Sky Global said it would use its satellites to offer broadband Internet access through televisions, personal computers, mobile telephones and personal digital assistants. Its set-top boxes would become a media server providing communication through TVs, printers, game consoles and telephones. The IPO would enable the company to invest in developing the technology that would enable the set-top box to perform these functions.
News Corp's move indicates its confidence that the shift to use broadband and cable to access the Internet would happen sooner rather than later. And it demonstrates News Corp's concentration on the set-top box arena, coming on the heels of America Online's announcement last week that it had forged an agreement to develop set-top boxes to let viewers customize what they watch.
The company will trade on the New York Stock Exchange under the SGN symbol. Goldman Sachs and Merrill Lynch are underwriting the offering.