Take that, BT - Murdoch plans pan-European Sky deals

BSkyB has confirmed early talks to buy stakes in european sister companies Sky Italia and Sky Deutschland from 21st Century Fox. Is it another Murdoch masterplan?

by Andrew Saunders
Last Updated: 21 Jul 2014

A statement issued by BSkyB this morning said ‘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.’

Note that ‘World class’ line. If they go through – and there’s a long way to go and a lot of buttons to push before they might – the deals would pave the way for Sky to become a pan-european pay-TV giant with 19m subscribers.

Crucially the deal would promise growth opportunities beyond the UK and the potential to make multinational deals for sports and movie rights. A pretty tempting set up for BSkyB, which no longer has things all its own way here thanks to vigorous competition, especially from BT.

But it’s not just established rivals that any deal is intended to stymie – online subscription players such as Netflix and Lovefilm also want a piece of the pay TV action. A three-country Sky would be in a much stronger position to resist.

Of course, like anything to do with the Murdoch empire, the situation is complicated by the various cross holdings and co-directorships. Here’s a primer: 21st Century Fox, which owns the stakes in question (57% of Sky Deutschland and the whole of Sky Italia) is also the major shareholder in BSkyB (to the tune of 39%). James Murdoch, son of the father and co-COO of 21stCentury Fox, is also a NED of BSkyB and was, in a pre-NoTW scandal life, its CEO.

Ok so far? Good, there’s more. Readers with good memories might also recall that even farther back in the day, said James Murdoch made a bid via News International to acquire the 61% of BSkyB it didn’t then own. The bid was withdrawn due to political pressure, and added to the phone hacking scandal shortly afterwards resulted in News International being split up into a newspapers business (still called NI) and a TV and movie business, 21st Century Fox.  

Phew. Now for the finale. That original bid was widely seen as the first step in a move to create a consolidated pan-european Sky TV. So viewed in that context, this latest story looks pretty much like James Murdoch having another bite at the same cherry, but from a different angle.

This way he might sidestep many of the media plurality issues which derailed the original NI bid, and will also put the lion’s share of competition rulings into the hands of the European Commission rather than Ofcom alone – further away from the meddling hands of UK politicians.

Were these purchases to go ahead, the way would be open for Fox to buy the 61% of BSkyB it doesn’t own, thus completing the original masterplan. Clever huh?

Expect a great deal of hem-ing and haw-ing – both over price and regulatory concerns - before anything much actually happens though. This is one major drama which is going to run and run.

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