21st Century Fox, U.K.'s BSkyB Close European Pay TV Deals
The combined company, led by CEO Jeremy Darroch, will become a European giant with nearly 20 million pay TV subscribers
Rupert Murdoch's 21st Century Fox and U.K. pay TV giant BSkyB have completed multi-billion dollar European pay TV deals that expand the latter's reach and scale.
The transactions, which had a value of $9 billion-plus when first announced, create a new European satellite TV giant, led by CEO Jeremy Darroch. BSkyB said Wednesday it paid $10.87 billion in the deals with Fox and minority shareholders of Sky Deutschland.
The 19.3 million-plus TV subscribers that the combined firm had as of the end of September give it increased scale to operate and compete beyond a single country. Its video subscriber count is just below the number reached by John Malone's international cable operator Liberty Global, which had 21.6 million video customers as of the end of September.
The deals consolidate under the British pay TV giant's control the European pay TV platforms that Fox has so far controlled. Fox will retain its 39 percent stake in the company, which has acquired Fox's 100 percent ownership of Sky Italia and roughly 57 percent stake in Sky Deutschland. In addition, it has acquired some of Sky Deutschland minority shareholders' stock to give it a total stake of more than 89.7 percent in the firm.
Fox earlier this year said it would receive approximately $9.3 billion in value in the deals, comprised of approximately $8.6 billion in cash and the National Geographic Channels International stake, which raises Fox’s ownership stake in that business to 73 percent.
The acquisitions will "bring benefits of scale," taking the U.K. pay TV giant from around 11.5 million customers to nearly 20 million in five countries, the company said when the deal was first announced. On a combined basis, group revenue will increase from $12 billion (£7.6 billion) to $17.8 billion (£11.2 billion), it said back then.
On a conference call earlier this year, BSkyB management said the deals would become "strongly" accretive after the second year. Executives spoke of $340 million (200 million pounds) in synergies by the second year of the combination, mostly on the cost side of the business. More revenue synergies could come over time, with Darroch saying his team's multi-product strategy and newer services, such as Sky Store and the Now TV broadband-only service, could make their way to Germany and Italy over time.
Asked by THR about content synergies, Darroch said the larger company will be "a great partner for all content producers around world," but management was not assuming major savings in content costs. He signaled though that the three Sky companies would continue to develop content together, which will be even easier under the same company roof.