Murdoch may use Sky TV cash to boost Time Warner bid
Published 22/07/2014 | 02:30
Rupert Murdoch's 21st Century Fox is considering using proceeds from the sale of its Italian and German pay-TV assets to boost its offer for Time Warner, according to two people familiar with the matter.
Fox may reach an agreement to sell its wholly-owned Sky Italia unit and its 57pc stake in Sky Deutschland to British Sky Broadcasting Group in the next two weeks, the sources said.
The assets could be valued at about €10bn, people familiar with the matter said in May. Fox owns a 39pc stake in BSkyB.
The proceeds could give Mr Murdoch additional cash for a Time Warner bid without having to borrow more. While Fox is willing to pay more than $75bn after Time Warner's board rejected its $85 per-share bid, no final decision has been made on whether to bump the offer, the sources said.
JPMorgan & Chase, the biggest US bank by assets, and Goldman Sachs Group, the fifth-biggest, will help Mr Murdoch finance the bid.
BSkyB and Fox disclosed their talks about a European transaction in May, weeks before Fox approached Time Warner.
A deal with New York-based Time Warner would reshape the media industry by giving Fox more clout in negotiations with pay-TV providers, who are pursuing their own mergers to build scale.
Comcast agreed to acquire Time Warner Cable and AT&T struck a deal to buy DirecTV in recent months - the two largest acquisitions of 2014.
A Fox deal for Time Warner would trump both in size.
A Time Warner transaction could also trigger the sale of Fox's stake in BSkyB, according to Credit Suisse. BSkyB's 39pc holding has a market value of £5.6bn. Mr Murdoch and his son James had tried twice to win control of BSkyB, most recently in 2011, when political fallout from the phone-hacking scandal at one of Mr Murdoch's UK newspapers prompted him to abandon the bid.
A sale of the BSkyB stake could help Fox boost the cash portion of its offer for Time Warner, Credit Suisse said last week in a note.
A spokeswoman for New York-based Fox, didn't respond to a request for comment while a BSkyB spokeswoman declined to comment.
It was reported on Sunday that BSkyB chief executive officer Jeremy Darroch is close to agreeing to a price for the purchase of the European assets from Fox.
A deal would give BSkyB, already the biggest pay-TV provider in the UK, oversight of companies that sell satellite and cable programs to 8.5 million homes across Germany and Italy. By shedding the continental units, Fox would be left with cable and broadcast networks plus movie and TV studios, making it more attractive to investors who want to bet solely on video production - not distribution.
BSkyB said yesterday that it bought a 70pc stake in the UK's Love Productions, producer of the 'Great British Bake-off' and TV documentaries such as 'Benefits Street' and 'Baby Borrowers'. Sky Vision, the international distribution unit of BSkyB, will distribute Love Productions content.
Last week, BSkyB sold a minority stake in ITV, the UK's biggest commercial broadcaster with top-rated shows such as 'Downton Abbey', to John Malone's Liberty Global for £481m. (Bloomberg)