Co-owner Foxtel will purchase Seven West Media's 50 per cent stake in Presto and transfer subscribers to Foxtel Play before closing the on-demand service.
Netflix rival Presto will close at the end of January after Seven West Media agreed to sell its 50 per cent stake in the streaming service to co-owner Foxtel.
Pay-TV giant Foxtel, itself a joint venture between Rupert Murdoch's News Corp and Telstra, has agreed to buy the stake and will transfer subscribers to its Foxtel Play on-demand service.
Neither Foxtel nor Seven West gave reasons for the move but Presto, which launched in March 2014, has faced stiff competition from the likes of US giant Netflix and Stan, a local joint venture by Fairfax Media and Nine Entertainment.
Roy Morgan Research released in June said Presto lagged a distant third in Australia's on-demand market, with 142,000 subscribers to Stan's 332,000 and 1.878 million for clear market leader Netflix.
"It has been great working with the team at Seven on Presto and we look forward to future collaborations," Foxtel chief executive Peter Tonagh said.
Presto subscribers will transfer to Foxtel Play in December and Presto will close on January 31.
At 1103 AEST, Seven West Media shares were down one cent, or 1.31 per cent, at 75.5 cents. News Corp shares were up 79 cents, or 4.23 per cent, at $19.45.