BSkyB Confirm Interest in Sky Germany and Italy Acquisitions

BSkyB (Sky Broadband) has confirmed last week’s report that it has an interest in merging with Sky Italia and Sky Deutschland, which are all broadly owned and controlled by Rupert Murdoch’s 21st Century Fox (although Murdoch’s stake in BSkyB is just over 39%). But no agreement has “ever been reached“.

Bringing all three together as a single European operator might avoid some of the regulator hassles that Murdoch has faced in the United Kingdom before, which have prevented him from taking majority control of BSkyB.

Such a move might also pave the way for a potentially bigger collaboration with Vodafone in the areas of broadband, TV and or mobile communications (here), which have previously been rumoured to be partly intended as a means of tackling BT’s growing influence in the pay TV market.

21st Century Fox Statement

“Over the years we’ve had numerous internal discussions regarding the organizational and ownership structure of the European Sky-branded satellite platforms. From time to time these conversations have included BSkyB, however no agreement between the parties has ever been reached.”

BSkyB Statement

“BSkyB has a clear set of plans to grow its business in the UK and Ireland, is executing these well and expects to continue to achieve excellent growth and returns for shareholders. At the same time, the Company continuously explores ways to create further value for shareholders.

As part of this approach, the Company initiated preliminary discussions with 21st Century Fox to evaluate the potential acquisition of its pay-TV assets in Germany and Italy. BSkyB believes at the right value, this combination would have the potential to create a world-class multinational pay TV group.

These discussions have not progressed beyond a preliminary stage, no agreement has been reached on terms, value or transaction structure and there is no certainty that a transaction will occur.

Any potential agreement would be subject to external factors including the Sky Deutschland share price continuing to trade on an undisturbed basis. BSkyB’s focus in respect of Sky Deutschland would be to acquire 21st Century Fox’s controlling stake (57 per cent on a fully diluted basis). As a consequence BSkyB would be required to make a takeover offer to the public minority of Sky Deutschland in accordance with relevant German legislation. BSkyB would expect, subject to German minimum offer price rules, to make this offer without a premium.

All Board discussion of this topic is solely within a committee composed of the Independent Directors of BSkyB, in which Directors affiliated with 21st Century Fox do not participate.”

However a report in the Telegraph suggests that both Ofcom in the United Kingdom and other European regulators could oppose such a move based upon media plurality concerns (competition), which is despite last year’s move by Murdoch to split his empire through a division of its TV and newspaper businesses. But Murdoch remains in control of both and regulators are wise to that.