Tabcorp chief executive Gillon McLachlan may want Kayo Sport’s audience, but on Tabcorp’s own balance sheet a full takeover of Foxtel does not add up.

A stake, a partnership or a joint venture is plausible. Buying the whole business is not.

The idea, floated by the Nine Entertainment owned Australian Financial Review, is that Tabcorp could put together a bid for Foxtel, owner of Kayo and Fox Sports. According to the AFR, McLachlan has held preliminary discussions about some form of transaction.

Tabcorp chief executive Gillon McLachlan

Treat it with a pinch of salt. Tabcorp’s existing financial resources would not comfortably cover a takeover. Any full bid would need substantial new funding, almost certainly involving outside investors, more debt and quite possibly DAZN keeping a stake, or even control.

 

The pitch, and the problem

The pitch from Tabcorp’s side is easy to understand. Owning Kayo and Fox Sports would give TAB direct access to a large sports audience, sitting alongside its existing Sky Racing operation.

The problem is everything that comes with it. A new owner would have to service the acquisition debt, grow subscriptions fast enough to cover that borrowing, carry Foxtel’s existing liabilities and keep paying for NRL and AFL rights.

And it would be doing that just as Apple, Netflix, Paramount and Amazon, all with far deeper pockets and a fresh appetite for live sport, line up to take on Foxtel the next time a major rights deal comes to market.

What Tabcorp actually has

Tabcorp today is a wagering and media business. Its lotteries and Keno operations were split off into The Lottery Corporation in June 2022. It is funded through shareholder equity, operating cash flow and borrowings, including bank facilities and debt securities.

Its results for the year ended 30 June 2026:

Measure FY26
Revenue A$2.64 billion
EBITDA before significant items A$431.7 million
Statutory net profit A$46.3 million
Net debt A$533 million
Net debt to EBITDA 1.2 times
Unrestricted cash plus undrawn facilities A$1.161 billion

That last figure is available liquidity, including unused borrowing facilities. It is not A$1.161 billion sitting in the bank.

Tabcorp’s stated leverage target is below 2.5 times EBITDA through the cycle.

Can it afford Foxtel?

DAZN completed its purchase of Foxtel in April 2025 in a deal that valued the business at A$3.4 billion enterprise value. That figure included Foxtel’s debt and the financing structure around it, so it was never a straight A$3.4 billion cash payment to the former shareholders. It is also a historical benchmark, not today’s asking price.

Run Tabcorp’s current EBITDA against its 2.5 times ceiling and it implies roughly A$546 million of additional net debt capacity before it hits that threshold.

That headroom is already spoken for, in part. Tabcorp still has its proposed BetMakers acquisition to fund, which its own results say will push leverage to about 1.6 times, assuming 25% take up of the share consideration. On those numbers the remaining headroom shrinks to somewhere near A$390 million.

Yes, buying Foxtel would bring Foxtel’s earnings onto the books and could support more borrowing. But lenders would scrutinise its cash generation, its existing debt and, above all, its sports rights commitments before extending a cent.

How a deal could be structured

A full acquisition would need a specially built funding package. The realistic options are:

Raising substantial new equity from shareholders
Bringing in a financial partner
DAZN retaining an ownership interest
Buying a stake or selected assets rather than the whole group
Establishing a joint venture instead of an outright purchase
What Tabcorp would gain

The upside is real. Kayo and Fox Sports could help TAB reach new customers and hold existing ones, within advertising and marketing rules. Subscription and advertising revenue would give Tabcorp income streams beyond wagering. Sky Racing could sit alongside major football, cricket and other codes, and sports broadcasting combined with TAB services could form a stronger, more coordinated offer for pubs and clubs.

The strongest argument is that Tabcorp could monetise a sports audience three ways: subscriptions, advertising and betting. The question is whether those extra earnings justify the price and the ongoing content bill.

The limits

They are significant. Owning Foxtel means expensive rights obligations, broadcast operations and an entertainment business that has little to do with TAB.

Any customer data sharing, subscription incentives or preferential advertising arrangements between the two would face regulatory and contractual examination.

And owning Kayo would not unlock in play betting during live matches. Online in play sports betting remains prohibited in Australia, according to ACMA.

The verdict

Full ownership of Foxtel could make strategic sense for Tabcorp, but only if the price, the financing and sustainable cash flow all stack up. Right now they do not.

The stronger case is for a financial partnership, a minority investment or a tightly structured sports transaction. Access to Kayo’s audience alone does not justify buying the whole of Foxtel.

There is the possibility that the AFR story could kickstart interest from the likes of Paramount Skydance, Google and their YouTube oeration, as well as Amazon who already have a bigger audience in Australia than Tabcorp an offer for Foxtel. All of these operators are currently aquiring sports rights and have deeper pockets than Tabcorp.