BSkyB seals €6.1bn deal with Rupert Murdoch to create 'Sky Europe'
Published 25/07/2014 | 08:10
Britain's BSkyB has agreed to pay around 4.9 billion pounds (€6.1 billion) to buy Rupert Murdoch's pay-TV assets in Germany and Italy, responding to the slowing growth at home with a deal to create a European media powerhouse.
BSkyB, 39-percent owned by Rupert Murdoch's 21st Century Fox , will pay for the deal with cash, debt and by a placing of shares that represents around 10 percent of the firm's issued share capital.
BSkyB said under the deal it would pay €3.10bn for Sky Italia and €3.6bn for Fox's 57 percent stake in Sky Deutschland to create a combined group with nearly 20 million customers.
The payment for Sky Italia will be made up of cash and BSkyB's stake in the National Geographic Channel. It expects to realise €252bn of run-rate cash synergies by the end of the second full financial year after completion, with further additional synergies to come.
The FTSE 100 listed company announced the deal as it published full-year results in line with forecasts.
The 25-year-old BSkyB, has grown to dominate the British pay-TV market, drawing more than 10 million homes with its programming including sports, movies and U.S. drama.
A move into Italy and Germany, where pay-TV is not yet as popular or profitable, would offer BSkyB a new source of growth away from Britain, where it is facing its first real challenger in the form of telecoms group BT
A combined Sky Europe would have around 20 million subscribers. Murdoch's 21st Century Fox, which owns 100 percent of Sky Italia, 57 percent of Sky Deutschland and 39 percent of BSkyB, is in the process of trying to buy Time Warner .
Under German takeover law, it will have to make an offer for the rest of Sky Deutschland. The offer will be at €6.75 per share.
The proceeds will boost 21st Century Fox in its pursuit of Time Warner after it failed with an offer worth 80 billion US dollars (£47 billion) earlier this month.
Twenty-First Century Fox, which will continue to own 39% of BSkyB, includes Fox News and the Fox network behind The Simpsons and Family Guy, as well as Hollywood studio 20th Century Fox, maker of the X-Men and Ice Age films.
The company was formed after Mr Murdoch split it away from the News Corp publishing firm, which controls The Sun, The Times and The Sunday Times, as well as the Wall Street Journal and New York Post.
BSkyB's European expansion was announced at the same time as it said annual operating profits dropped 5% to€1.58bn due to investments in connected TV services and Premier League football rights.
It ended the year with 11.5 million customers, an increase of 342,000 over the year and 75,000 in the quarter. The company said it added a third more customers than in the previous year, its highest rate of growth in three years.