Could Rupert Murdoch’s last corporate punt be on the betting industry? - 15th March 2021

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By John McDuling

When Rupert Murdoch was a student at the Victorian boarding school Geelong Grammar in the 1940s he was known to spend spare weekends at the nearby racetrack betting on horses.

So it would be fitting if the billionaire media mogul’s latest, and perhaps final, corporate manoeuvre in his homeland involved a punt on the betting industry itself.

Where will Rupert Murdoch place his final bets? CREDIT: AP

Murdoch turned 90 last week, and the passing of that milestone has already sparked significant intrigue. The Financial Times used a lengthy feature to speculate that the News Corp executive chairman has one big deal left in him.

The potential for News Corp, his Australian focused vehicle which owns a controlling stake in Foxtel and various local and global newspapers including the Herald Sun in Melbourne and the Wall Street Journal, to be reunited with his other listed media vehicle, US focused Fox Corp, has long been discussed and could make a lot of sense.

But there is at least one other deal process in Australia that may have piqued Murdoch’s interest. An auction is under way for Australia’s largest listed gambling business, Tabcorp, after the $10 billion firm told the market last month it had received numerous approaches for its wagering business, which includes the TAB and Sky Racing brands.

Entain, the UK-based owner of Ladbrokes and Sportingbet, has already lobbed a $3 billion bid for the wagering business. Private equity firms have also been linked with the asset. It would make sense if Murdoch was keeping a close eye on proceedings too.

His family certainly has form in this industry. Under Lachlan Murdoch, Fox in the US has become a slimmed down company focused on live news and sport, but also one that has pushed heavily into betting. Lachlan, who was appointed co-chairman of News Corp in 2014, has exercised more influence over the family empire as his father’s health waned.

Respected Bank of America Merrill Lynch analyst Jessica Reif Cohen recently described Fox as “the best positioned media company to benefit from sports betting” and its exposure to the sector has been paying off - Fox shares closed at record highs on Friday, valuing the business at $US25 billion ($32 billion).

There are natural adjacencies between live news and sport and gambling that apply in both the United States and Australia. Betting companies are among the biggest advertisers for live sport, while in game betting on sport also offers new revenue streams for traditional media companies.

Fox established the FoxBET joint venture with US gaming giant The Stars Group in 2019, which it has promoted heavily on its television properties.

Fox has a 2.5 per cent strategic stake in Flutter, the UK-based owner of Stars, global betting exchange Betfair, Sportsbet in Australia and other key assets in the US including sports betting and fantasy website FanDuel. Fox also has options to increase its stake in FanDuel and other US assets significantly, and this exposure has excited investors.

In Australia, live odds are quoted on some sports on Foxtel’s KayoSports streaming platform. Through its Sky Racing channel, Tabcorp also has media assets that are arguably underperforming that News may be able to invigorate.

The Murdochs have teamed up with Tabcorp before. In 2016 they formed SunBet joint venture, an online betting service that leveraged the brand and audience of the UK tabloid. However, the venture ultimately failed.

The other key piece of the Tabcorp puzzle is unlikely to faze Murdoch, should his interest be sufficiently piqued. It involves Racing NSW chief executive and (Australian Rugby League Commission chairman) Peter V’landys.

The influential administrator emerged as a kingmaker in the Tabcorp process last month. Since Racing NSW controls a key regulatory licence for Tabcorp in a major market, V’landys effectively has veto power over any deal and told this masthead last month “we will certainly not be giving that approval lightly”.

V’landys controls big advertising budgets and gets a favourable run in the News Corp papers. He isn’t afraid to use his considerable influence in sport and media and will drive a hard bargain in any negotiation. As has Murdoch, time and again, in his storied corporate career.

(The Sydney Morning Herald)