Sky shores up Italian, German holdings with £5bn pay TV blowout

UK-based media empire BSkyB created a multinational pay TV business on Friday with the £4.9bn acquisition of Sky Italia and a 57.4 per cent stake in Sky Deutschland. The move puts Sky in a leading position in the pay TV market in the UK, Italy and Germany.

Sky is buying the assets from 21st Century Fox, which owns 100 of Sky Italia to be sold for £2.45bn with approximately £2.07bn to be paid in cash and the balance to be satisfied through the transfer of Sky’s 21 per cent stake in National Geographic Channel International; 21st Century Fox’s shareholding in Sky Deutschland is being sold for a consideration of £2.9bn.

Sky expects to be able to realise £200m of run-rate cash synergies by the end of the second full financial year after completion, with further additional synergies expected in subsequent periods. The majority of synergies are expected to arise from the UK and Italy, which are the two businesses with larger and more similar direct to home operations, the company said.

The enlarged group will be better positioned to take advantage of the enhanced growth opportunity
as result of the ability to share expertise across the wider business. BSkyB in the UK, Sky Italia and Sky Deutschland are complementary businesses with a common brand, operating similar business
models and offering similar products to customers and the combination will enable the
application of best-in-class capabilities in areas such as content, innovation and service delivery.

Jeremy Darroch, BSkyB’s Chief Executive, said: “This transaction will create a world-class, multinational pay TV business with enhanced headroom for growth and immediate benefits of scale. The three Sky businesses are leaders in their home markets and will be even stronger together. By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns.”