Deal extends BSkyB’s European reach and fills Murdoch war chest

The company is buying up the whole of Fox’s Sky Italia and 57.4% of Sky Deutschland

BSkyB created a European pay-TV empire on Friday in a £7.3bn spending spree, at the same time refilling Rupert Murdoch’s war chest for another takeover attempt for Time Warner.

The most significant deal for the company since Sky merged with British Satellite Broadcasting in 1990 sees BSkyB virtually doubling its customers to 20 million at a stroke. After months of talks the company – 39 per cent owned by Mr Murdoch’s 21st Century Fox – is buying the whole of Fox’s Sky Italia business for £2.45bn as well as its 57.4 per cent stake in Sky Deutschland.

Including a voluntary offer to Sky Deutschland’s minority investors, BSkyB could end up paying up to £7bn in cash as well as transferring its 21 per cent stake in the National Geographic Channel, valued at £382m.

The BSkyB deal delivers £4.9bn in cash into Fox’s coffers for Mr Murdoch to potentially fund another tilt at media giant Time Warner after his $80bn (£48bn) takeover offer for the company was rebuffed last week. Mr Murdoch offered $85 a share while Warner’s board is reportedly looking for nearer $100.

But BSkyB has also created a European powerhouse, with a leading pay-TV business in three of Europe’s four biggest markets and lifting its number of customers from 11.5 million to 20 million. Revenues will surge nearly 50 per cent to more than £11bn and the company gains a new source of growth away from the UK.

Sky Deutschland, which also encompasses Austria, has revenues of £1.3bn and 3.7 million customers while Sky Italia has 4.8 million customers and £2.3bn in revenues. But subscription channels remain less popular in Europe than in the UK and the deal opens up almost 100 million households as potential new customers, 66 million of which do not have pay TV, and is expected to reap £200m in savings in two years’ time. Its chief executive Jeremy Darroch said: “The three Sky businesses are leaders in their home markets and will be even stronger together.”

Analysts said the price was in line with expectations, although it would affect Sky’s credit rating in the short term. The shares fell 50.5p to 874.5p as the company sold 156 million to help pay for the deal.

Claire Enders, a media analyst, said the deal showed BSkyB was moving to build its business beyond Britain and growing competition with BT. “It’s now focused on transporting its technology and its production skills into other markets where there is demand for cutting-edge TV,” she said.

21st Century Fox is committed to returning cash to shareholders – having returned $4bn last year – but Mr Murdoch has said these returns will be “executed regardless of any potential acquisition or investment activity” and Wedbush analyst James Dix said that “would not prevent a renewed, higher offer for Time Warner”.

The deal overshadowed results from BSkyB which reported a 7 per cent rise in revenues to £7.6bn although operating profits dipped to £1.26bn in the year to 30 June, due in part to the rising cost of Premier League fixtures. The company added 342,000 customers over the year – its highest rate of growth for three years – and 75,000 over the latest quarter.

BSkyB connected nearly three million of its set-top boxes to the internet this year, allowing customers to download entire box sets of hit shows. Game of Thrones, 24 and Grey’s Anatomy were each downloaded 10 million times over the year. The climax to a tense Premier League season also saw Sky Sports gain its highest audience share for seven years.

Start your day with The Independent, sign up for daily news emails
News
The two faces revealed by the ultraviolet light
newsScholars left shaken after shining ultraviolet light on 500-year-old Welsh manuscript
News
Rosamund Pike played Bond girld Miranda Frost, who died in Die Another Day (PA)
news
Arts and Entertainment
books
News
newsHow do you get your party leader to embrace a message and then stick to it? With people like this
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat