BSkyB Confirms Preliminary Talks With Fox Over European Pay TV Deal
Discussions "have not progressed beyond a preliminary stage," but "at the right value, this combination would have the potential to create a world-class multinational pay TV group," the U.K. pay TV giant said.
U.K. pay TV giant BSkyB and 21st Century Fox on Monday confirmed that they have held talks about a possible deal that would consolidate the European pay TV companies that Rupert Murdoch's entertainment company controls.
The statements confirmed a weekend report by Bloomberg that BSkyB could acquire Sky Italia and Sky Deutschland in what the news service said could be a nearly $14 billion deal.
"BSkyB has a clear set of plans to grow its business in the U.K. and Ireland, is executing these well and expects to continue to achieve excellent growth and returns for shareholders. At the same time, the company continuously explores ways to create further value for shareholders," BSkyB said.
"As part of this approach, 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."
But BSkyB also added: "These discussions have not progressed beyond a preliminary stage, no agreement has been reached on terms, value or transaction structure, and there is no certainty that a transaction will occur."
The company, in which Fox owns a 39 percent stake, also added: "Any potential agreement would be subject to external factors, including the Sky Deutschland share price continuing to trade on an undisturbed basis. BSkyB’s focus in respect of Sky Deutschland would be to acquire 21st Century Fox’s controlling stake (57 percent on a fully diluted basis). As a consequence BSkyB would be required to make a takeover offer to the public minority of Sky Deutschland in accordance with relevant German legislation. BSkyB would expect, subject to German minimum offer price rules, to make this offer without a premium."
And BSkyB highlighted: "All board discussion of this topic is solely within a committee composed of the Independent Directors of BSkyB, in which directors affiliated with 21st Century Fox do not participate."
Meanwhile, 21st Century Fox said Monday: "Over the years we've had numerous internal discussions regarding the organizational and ownership structure of the European Sky-branded satellite platforms. From time to time these conversations have included BSkyB, however no agreement between the parties has ever been reached."
The three European Sky companies have been working closely together for a number of years. BSkyB, Sky Italia and Sky Deutschland recently greenlit their first three-way co-production, a superhero series based on the hit Italian comic book Diabolik. Sky Italia's much-hyped new mafia drama Gomorrah will air in the U.K. on BSkyB and on Sky Deutschland in Germany.
The three companies also share some technology in such areas as set-top boxes. But a combination could allow for additional cost savings and pan-European bids for sports and other content rights, analysts have said.
"We’ve made no secret of our belief over the years that we think the Skys are strong together,” James Murdoch said on an earnings conference call earlier this week.