BSkyB Hires Investment Banks to Help Mull Possible Euro Pay TV Deal

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LONDON – BSkyB has hired investment banks Morgan Stanley and Barclays to help the U.K. pay TV giant evaluate a possible acquisition of Sky Deutschland in Germany and Sky Italia in Italy, sources confirmed Monday.

Rupert Murdoch’s 21st Century Fox would retain its 39 percent in BSkyB, but expects to get $11.5 billion for its ownership in the two other firms, the Sunday Times, part of Murdoch's News Corp, reiterated.

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The pan-European pay TV giant would reach roughly 20 million homes. The merged Sky Europe could then push for rights deals for films, sports and TV shows across its homes, analysts have said.

Reports of the negotiations of the deal first emerged in May. Fox fully owns Sky Italia and holds a 57 percent stake in Sky Deutschland. The Sunday Times said the deal could reap Fox around $11.5 billion, roughly in line with the initially reported total deal value of around $14 billion.

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At least one minority shareholder of Sky Deutschland, hedge fund investor Crispin Odey, recently signaled he may oppose a deal.

Sanford C. Bernstein analyst Claudio Aspesi last week upgraded his ratings on the stock of BSKyB to "market perform," saying "BSkyB's low valuation reflects fears of rising content competition," while he is more optimistic, even though he said the price tag of Sky Italia is unclear in the possible pan-European deal. "Ultimately, we think the big battle for BSkyB will be to convince its shareholders that it needs to pay a high multiple for Sky Italia, hence how large that multiple is will make all the difference," he wrote"

In May, BSkyB confirmed the early-stage deal talks.

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"The company initiated preliminary discussions with 21st Century Fox to evaluate the potential acquisition of its pay-TV assets in Germany and Italy," it said. "BSkyB believes at the right value, this combination would have the potential to create a world-class multinational pay TV group."

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai


 

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