News Corporation (ASX: NWS) reportedly declined a buyout offer of its troubled pay television subsidiary Foxtel.
An unnamed special purpose acquisition investment company (SPAC) approached News Corporation with an offer to buy Foxtel, according to SMH.com.au.
A SPAC, which is also called a "blank cheque company", is a publicly listed entity that's cashed up with the sole purpose of acquiring an unlisted business.
The United States concept is a cousin of the Australian phenomenon of "reverse-listing", in which a company can float on the ASX without going through the normal rigours of a new listing.
A sale would have provided relief for Foxtel, which owes $2.1 billion of debt.
News Corporation, which owns 65% of the pay TV brand, did not accept the takeover proposal.
In early Monday morning trade, the News Corporation share price is down 0.53% to $24.41. It had rallied for the past month after trading at $18.14 on 30 October.
News Corporation and Foxtel declined to comment to The Motley Fool.
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Foxtel's slow death
Foxtel has been on a downward slope in recent years, losing clientele and revenue to cheaper streaming services from Stan, Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS) and Amazon.com Inc (NASDAQ: AMZN).
Its one saving grace was live sport, but even that's now under attack after Nine Entertainment Co Holdings Ltd (ASX: NEC) secured the broadcast rights to Australian rugby union this month.
Nine intends to put much of that content on its Stan streaming service.
The COVID-19 pandemic has also devastated Foxtel's pubs and clubs subscription base, which was formerly a reliable cash cow.
Last year the pay TV operator tried to raise billions to pay off old debts. It was unsuccessful, and News Corp was forced to chip in $300 million. Minority shareholder Telstra Corporation Ltd (ASX: TLS) declined to put any more money into the sinking ship.
In November, Foxtel finally managed to refinance $1.1 billion of its debt to provide it more breathing space in terms of time due.
