BSkyB has entered into preliminary negotiations about the potential acquisition of 21st Century Fox’s interests in Sky Deutschland and Sky Italia. Both markets have relatively large populations and strong football leagues, making them attractive options for BSkyB. Fox currently owns 39.1 per cent of BSkyB, about 57 per cent of Sky Deutschland and all of Sky Italia. A united group would have a total of 23 million subscribers across all three markets.
In a statement BSkyB said that ‘at the right value, this combination would have the potential to create a world-class multinational pay TV group’. A united group would have a total of 23 million subscribers across all three markets, but could face opposition from regulators — the Telegraph is reporting that Ofcom is poised to oppose the deal in the UK.
However, the chances are that it’s going to become increasingly difficult for regulators to argue about media dominance at a time when groups like BSkyB are facing intense competition from the likes of BT Internet and Netflix, not to mention the challenges on the advertising front from the various tech players.
That said, uniting the companies in one group would be extremely beneficial, allowing BSkyB to:
- strengthen its negotiating position for content in an increasingly international marketplace;
- develop data-driven TV advertising in Italy and Germany via Sky Adsmart, which would also allow them to build out a local TV advertising services in those markets;
- negotiate for Bundesliga and Serie A rights for use across multiple Germany, Italy and the UK and Ireland markets;
- offer advertisers a reasonable level of scale across the three key European markets, as many of BSkyB’s online competitors do today.
Any potential agreement would be subject to external factors including the Sky Deutschland share price continuing to trade on an undisturbed basis, and BSkyB would be required to make a takeover offer to the public minority of Sky Deutschland according to German legislation. BSkyB say they would expect, subject to German minimum offer price rules, to make this offer without a premium.