BSkyB results could force Murdoch to increase bid

Click to follow
The Independent Online

Rupert Murdoch will have to increase his bid for BSkyB by as much as 20 per cent if he is given the go-ahead by regulators, analysts warned yesterday, after the broadcaster unveiled another set of stellar results.

Sky announced in the morning that profits had soared 26 per cent to £520m in the six months to the 31 December as it hit the 10 million customer mark. Its shares closed at 767.1p, valuing the whole company at more than £13bn.

City analysts said the strong results, with revenues up 15 per cent at £3.2bn, would strengthen the independent board's hand in its negotiations with Mr Murdoch's News Corporation.

NewsCorp owns 39.1 per cent of Sky and approached in June with a 700p per share offer to buy the rest of the company. The board rejected the approach but said it would accept a price above 800p. Both sides are waiting for regulatory approval from the Culture Minister, Jeremy Hunt, who is scrutinising the deal on plurality grounds.

Steve Liechti, an analyst at Investec, expects the deal to be done by the autumn but believes that NewsCorp will have to pay 840p per share.

Paul Richards, of Numis, said he did not believe that the deal raised competition or plurality issues, adding that the deal could cost NewsCorp as much as 850p per share.

Sky revealed yesterday that the costs of the bid had already hit £7m.

The broadcaster ended the second quarter with 140,000 more customers than when it started, as demand for high-definition programming rose. The company also saw its fastest growth in broadband take-up in more than two years. "In the second quarter, we saw strong demand across the board," said Jeremy Darroch, the chief executive of Sky. "We are cautious on the economic outlook for 2011, while remaining very confident in the long-term opportunity for the business."

Sky also confirmed that it had bought the Cloud, a Wi-Fi rival to BT's Openzone network. The hotspots will be available to its broadband customers away from their homes, and will help with the launch later this year of Sky Anywhere, which allows subscribers to view its television channels on devices including tablets and smartphones. Sky said it planned to open a new call centre in Sheffield, creating 1,500 jobs.