The deal sees Rupert and Lachlan Murdoch's News Corp, Foxtel's 50 per cent owner, come together with long-time rival Kerry Stokes, executive chairman and the largest shareholder of Seven West Media.

Under the sub-$20 million 50:50 partnership, Seven has chosen to have its content shown on Presto, the brand for Foxtel's nascent movie streaming library, to which television content will be added from both Seven and Foxtel.

The beefed-up Presto subscription service aims to get to market before United States streaming giant Netflix launches in Australia in March. It will be a fierce rival to Netflix and TV streaming service Stan, Nine's soon-to-be-launched $100 million joint venture with Fairfax Media, owner of The Australian Financial Review.

Seven West Media chief executive Tim Worner said Foxtel already had the technology platform, subscriber ­management systems, call centres, and customer service capabilities to support Seven in streaming.

Mr Worner said the venture was "certainly" a cheaper option than Seven building its own streaming platform – last year Seven worked on a streaming project with Nine before walking away.

"There are a lot of things that are in place already," said Mr Worner.

"But I have to say that the major attraction is not because it's the cheapest option. It just makes sense because Foxtel and Seven in this space can win and that is our intention."

Well connected

The costs of Presto's technology platform, which Foxtel will continue to own and operate, will be charged to the venture and each party will contribute contra advertising. Foxtel has a formidable marketing network through its channels and that of its joint owners News Corp and Telstra. Seven has three digital channels: Pacific Magazines and its digital products, and West Australian newspapers.

The venture will also pay for other marketing and programming contributed by Foxtel and Seven separately from Australia and its deals with US and UK studios. Mr Worner said the deal was an example of how the ­internet was "the most disruptive invention in history".

Foxtel's chief operating officer Rohan Lund, formerly chief operating officer of Seven West Media, has played a key role in developing Presto although Mr Worner and Foxtel chief executive Richard Freudenstein said the new venture would search for its own chief executive. The companies negotiated for months before striking the deal.

"Look, with any relationship that is going to last for a long, long time you want to go into it in the right way and we just wanted to make sure it was set up properly," said Mr Freudenstein. He did not confirm the length of the deal, which is subject to regulatory approval.

Both CEOs said marketing would be key to Presto's success or otherwise, with programme sponsorships a possibility. "We have always wanted to be in subscription television," said Mr Worner. "We are going to put the best of what we have both got and combine our promotional grunt, and I think it is going to be a pretty compelling offering." Mr Freudenstein would not comment on pricing but said combined Presto and television bundles would be offered in combination with Telstra's broadband and mobile offerings.

Separately, Foxtel and Discovery Communications are currently bidding $605 million to take over smaller rival Ten Network Holdings, whose content could be rolled into the Presto platform if Foxtel is successful, leaving Nine the stand-alone network in streaming.Presto will not commission new, original content in the first place.

Seven last month warned of a 10 per cent a slide in its first-half profit due to softer than expected television advertising. Last week it announced a management restructure in which chief operating officer Nick Chan left as part of a cost-cutting exercise.