Reaching For the Skies: BSkyB Clinches The Deal For Sky Europe
Reaching For the Skies: BSkyB Clinches The Deal For Sky Europe
Ruper Murdoch has hit the jackpot. His 21st Century Fox has the cash to splash if it wants Time Warner. This is because the company announced that it was selling its Italian and German pay television businesses to BSkyB or British Sky Broadcasting Group for around $9 billion which is valuable if Murdoch choses to go after Time Warner. The deal with BSkyB that is partly owned by 21st Century Fox is in keeping with the move to consolidate the European media industry . BSkyB is 39% owned by the Murdocj group . It is also one of the largest European pay-television providers which will expand its reach within the region. This offers premium sports and movie services to nearly 20 million customers all over Europe.
Media reports as well as analysts and investors are now exploring how this could change the dynamics of 21st Century Fox's quest to win over Time Warner and work for a giant media conglomerate that has prize media champions such as HBO and Warner Bros in its war chest. The deal has been long in the making with officials indicating that such a move would lead to the simplification of the structure of the firm. Plans were also on by 21st Century Fox to resume its stock buyback programme in the coming months.
Speculation is on whether the latest deal will enable 21st Century Fox to make the deal of the 21st century or risk being Rip Van Winkle. Cash from the BSkyB deal could be added to the massive financing package that supports a Time Warner purchase. Questions have been raised about how the $24 billion in debt could be arranged by Goldman Sachs and JP Morgan Chase, according to sources quoted by the media. Advisers to the group hold that about 15% of Time Warner shares could now rest in the hand of hedge funds pured into the stock following public disclosure of the takeover.
“Fox and Time Warner are now both engaged in posturing,” Todd Juenger, an analyst with Bernstein Research, wrote in a research note which has been quoted by extensive media sources. Analysts such as Juenger are vieweing the deal as a largely positive development for shareholders and investors. Murdoch has been quoted as saying“Our renewed authorization for our share buyback program will be executed regardless of any potential acquisition or investment activity”.
This deal will strengthen a key Murdoch holding during the time of consolidation within the European telecom industry according to analysts and media reports. BSkyB has been facing stiff competition recently from British group Vodafone and Germany's Deutsche Telekom. These groups have added media services to telecom offerings. The 3 Sky businesses will be stronger together according to CEO Jeremy Darroch of BSkyB. Analysts are questioning whether BSkyB will be able to attain expected cost savings. Now for the numbers.
BSkyB is said to acquire 21st Century Fox's 100% holding in Sky Italia for 25 billion pounds/$4.3 billion. The agreement includes £2.1 billion in cash and an additional £380 million paid by transferring the British company’s 21 percent stake in National Geographic Channel to 21st Century Fox. BSkyB would also purchase 21st Century Fox’s 57 percent stake in Sky Deutschland for around £2.9 billion. Uner German takeover rules , BSkyB would offer to purchase shares of Sky Deutschland's minority shareholders for 6 . 75 euros or $9.09. The next big date to watch out for is August 6th when both Time Warner an 21st Century Fox are set to report earnings. Foxy moves could be afoot then.
