Shares in BSkyB drop by 2.4pc as European merger talks confirmed
INVESTORS yesterday shunned Rupert Murdoch’s plans to create a new satellite TV giant in Europe, sending shares in BSkyB 2.4 per cent lower after the group confirmed it is in talks with 21st Century Fox to buy its stakes in Sky Deutschland and Sky Italia.
The deal, which analysts say could be worth up to £8.8bn and would create a broadcaster with 20m subscribers across Europe, was described by BSkyB as in “preliminary stages” yesterday.
Investec analyst Steve Liechti warned that a deal would have few near term benefits for BSkyB due to the weaker businesses of both Italia and Deutschland. “This looks a negative for BSkyB near term given… potential share issuance dilution. Fundamentally, this looks sensible for scale, but Italia and Deutschland are in weaker competitive positions with lower margins/returns vs BSkyB,” he said. With increasing competition in the UK from BT’s push into sport and pay-TV, Morning Wire understands BSkyB sees the move as a way to create synergies by expanding sales of services like Sky Go across Europe and sharing the costs of set-top boxes across a larger group.