euro news_news 15/08/2014 16:36 Page 1
s anticipated, BSkyB
has moved to
consolidate Europe's
pay-TV sector, with the
'new' Sky set to be the
number one pay-TV
provider in three of the four
largest markets in Europe,
with the enlarged business
having expanded growth
opportunity, benefits of
scale, and significant
synergy potential.
BSkyB has agreed with 21st
Century Fox to acquire its 100%
stake in Sky Italia and its 57.4%
interest in Sky Deutschland. The
enlarged company will
be a pay-TV provider
that serves 20 million
customers and brings
together the leading
pay TV businesses in
three of Europe’s four
biggest markets.
The total consideration for
the acquisition of Sky Italia is
£2.45 billion with approximately
£2.07 billion 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. The
acquisition of 21st Century Fox’s
shareholding in Sky Deutschland
is for a consideration of £2.9
billion in cash, valuing Sky
Deutschland at €6.75 per share.
The transactions are subject to
regulatory and independent
shareholder approval.
Sky says the enlarged business
will benefit from a significantly
expanded opportunity for longterm growth and value creation,
with 97m addressable
households. Of these households,
around 66m have yet to take payTV, with BSkyB suggesting there
is significant headroom to sell
additional products to and launch
new services for customers. The
acquisitions will also bring
benefits of scale, taking BSkyB
from 11.5m customers to 20m.
On an aggregated basis, group
revenues will increase from £7.6
A
world-class, multinational payTV 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,” said Jeremy
Darroch, BSkyB's chief executive
(left).
Nick Ferguson, chairman of
BSkyB, said the Independent
Directors of BSkyB
“unanimously”
believed the strategic
rationale for a
combination with Sky
Italia and Sky
Deutschland was
compelling. “The
agreed valuation represents an
attractive financial opportunity
that will deliver growth and
value creation for all
shareholders,” he stated.
According to Guy Bisson,
research director, television, at
IHS Technology, the jewel in
this deal in terms of short-term
growth is Sky Deutschland,
which has seen a dramatic
turnaround in its fortunes in the
past few years and continues to
grow strongly.
For Bisson, strategically, the
core aspects of the deal are not
the potential synergies and cost
savings that the enlarged group
will have, but the competitive
positioning and opportunity for
roll-out of multi-service
offerings across the three
markets.
He notes that although both
Sky Deutschland and Sky Italia
already have stand-alone OTT
services, a core plank of the
strategy for the new Sky entity
will be the roll-out of a unified
stand-alone OTT offering across
the markets, modelled on the
UK's NOW TV. “This will give
Sky a strong defensive position
against OTT entrants,” he
suggests.
BSkyB confirms
European consolidation
6 EUROMEDIA
billion for the standalone BSkyB
to £11.2 billion.
The enlarged group will be
better positioned to take
advantage of the enhanced
growth opportunity as result of
the ability to share expertise
across the wider business.
BSkyB, Sky Italia and Sky
Deutschland are complementary
businesses with a common
brand, operating similar
business models and offering
similar products to customers.
Bringing them together will
enable the application of best-inclass capabilities in areas such as
content, innovation and service
delivery, to the benefit all of
three businesses and their
customers.
Following the agreement to
acquire 21st Century Fox’s 57.4%
stake in Sky Deutschland, BSkyB
plans a voluntary cash offer to
Sky Deutschland’s minority
shareholders at €6.75 per share.
There is no minimum acceptance
condition as BSkyB believes it
can realise the advantages of
closer collaboration with Sky
Deutschland and support its
continued growth and
development with the 57.4%
stake it is acquiring through this
transaction. Significant minority
shareholders have already
dismissed the offer as too low.
The cash offers will be funded
in part by the proceeds of a
placing of 156.1m new Ordinary
Shares representing
approximately 10% of the issued
share capital of BSkyB. 21st
Century Fox has irrevocably
undertaken to participate in the
placing pro rata in order to
maintain its holding in BSkyB at
the current level of 39.14%. The
remaining consideration will
come from a combination of new
debt facilities and cash resources.
According to BSkyB, the
significant majority of synergies
are expected to arise from the UK
and Italy, these being the two
businesses with larger and more
similar direct to home
operations. Other than the
acquisition of acquired
programming rights, cost savings
are expected across most areas of
the business including the
production of live events,
commissioning, back office IT
systems, rationalisation of
suppliers and, over time, in
product and set top box
development.
“This transaction will create a