Foxtel and Austar together at last?

Austar United Communications, the Australian pay-television group majority owned by Liberty Global, has said that a $2 billion takeover bid from rival Foxtel had been pitched at an “appropriate” value.

The offer from Foxtel, half-owned by Australian telco Telstra with 25 per cent stakes held by News Corp and James Packer’s Consolidated Media, potentially ends close to a decade of failed negotiations on merging Australia’s two biggest pay-TV groups.

A successful deal would combine Austar’s regional network with Foxtel’s metropolitan operations and generate cost savings of close to $74 million a year, analysts said. It comes after a delegation from Foxtel, led by chief executive Kim Williams, flew to Denver earlier this year to discuss a potential deal.

The deal will face scrutiny by Australia’s competition regulator although analysts said the country’s relatively low pay-TV penetration rates, a strong terrestrial TV sector and the rise of internet-based entertainment would encourage the authorities to clear the transaction.