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UPDATE Sky UK Gobble Sky Italia and Sky Deutschland to Go European

Friday, Jul 25th, 2014 (8:14 am) - Score 613

BSkyB has today moved to create a pan-European pay TV and communications provider by announcing the acquisition of Sky Italia (Italy) and a 57.4% stake in Sky Deutschland (Germany). Both companies are controlled by Rupert Murdoch’s 21st Century Fox, although Murdoch’s stake in BSkyB has remained stuck at just over 39% due to political and competition concerns.

The total consideration for the acquisition of Sky Italia is £2.45bn, with approximately £2.07bn to be paid in cash and the balance to be satisfied through the transfer of BSkyB’s 21% stake in National Geographic Channel International to 21st Century Fox at a value of £382 million. Meanwhile the acquisition of 21st Century Fox’s shareholding in Sky Deutschland is for a consideration of £2.9bn in cash and they’ve already made an offer (€6.75 per share) to expand the stake via minority shareholders.

The move (announcement) effectively turns Sky into the “number one” pay TV provider in three of the four largest markets in Europe with 20 million customers (currently 11.5 million) and it might also help Murdoch avoid some of the regulator hassles in the United Kingdom, which have prevented him from taking majority control of BSkyB. But the transactions are still subject to regulatory and independent shareholder approval.

Jeremy Darroch, BSkyB’s Chief Executive, said:

This transaction will create a world-class, multinational pay TV business with enhanced headroom for growth and immediate benefits of scale. The three Sky businesses are leaders in their home markets and will be even stronger together. By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns.”

It’s interesting that this move was first predicted earlier this year after it was revealed that Vodafone and BSkyB had held discussions about collaborating via their TV, mobile and broadband services in order to combat BT (here and here), which saw UBS Analysts speculate that such a deal might be preceded by BSkyB merging its European pay-TV assets to form Sky Europe. An alternative vision suggests that Sky might instead consider buying a UK mobile operator of its own. It’s notable that one of Sky Deutschland’s partners is the German division of Vodafone.

Any such deal would give Sky Broadband in the United Kingdom the ability to offer a mobile service and turn them into a quad-play provider, much like Virgin Media and TalkTalk have already become with BT set to follow in a few months.

Meanwhile Vodafone, if such a deal were to proceed, could benefit from Sky’s premium TV content and may also expand their broadband solutions (the latter seems unlikely given their past failings with consumer broadband). But for now Sky will first have to pass through a few regulatory hurdles, which will no doubt cause some fun among politicians in the United Kingdom.

UPDATE 3:40pm

The CEO of Vodafone,Vittorio Colao, was today asked about their consumer fixed broadband ambitions in United Kingdom today and said, “We clearly want to be competitive in the [UK’s] consumer market“. The comment doesn’t give much away but suffice to say that today’s BSkyB developments are lending more credibility to the possibility of a future link-up with Vodafone.

But if Vodafone did give consumer broadband services another shot then we’d hope they do a better job than the ‘fire and forget’ approach of their first attempt, which left the service and its customers to be neglected for years before closure. Meanwhile EE’s struggle to carve out a slice of the same market and O2’s failure to make it work, despite a promising start, should serve as a reminder of how difficult it is to make home broadband work.

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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