BSkyB has announced the completion of its acquisition of Sky Italia and takeover offer for Sky Deutschland to create ‘Sky Europe’.
The enlarged group will serve 20 million customers across five countries – Italy, Germany, Austria, the UK and Ireland – with “significant potential” for growth as the company looks to tap into the 60 million households across the five markets that are yet to take pay TV.
The move saw BSkyB acquire 21st Century Fox’s 100% stake in Sky Italia and its 57.4% interest in Sky Deutschland, and was worth almost £7 billion.
Market analyst at cityindex, Ken Odeluga, said that whilst the announcement is really just a formality, very likely to be waved through at an AGM next week, for Sky, it is symbolic of significant changes in the way it defines its business and in the longer term, how it derives revenues.
“No longer encumbered by the ‘broadcasting’ part of its moniker, Sky is signalling its readiness to grasp opportunities represented by changes in dominance of business models as program consumption becomes increasingly digital,” Odeluga said.
“The idea is that with a stronger and more monolithic brand across Europe, Sky would be on a better footing to tackle an increasingly consolidated broadcasting landscape with combined marketing spend and amalgamated purchasing power.
“Of course, the consolidated profits of about £1.3bn annually, were also a strong motivation to get the deal done.
Looking even further ahead, Odeluga said he is predicting good things for the sector.
“Our bull case in the sector remains that the first big UK or European broadcasters to begin to embrace direct licensed Internet delivery will have a seismic advantage in a market that should begin to grow in double digits within five years,” he said.
“The sooner Sky, or BT enter this arena, the lower will be their reliance on pure content creators in the initial phase of this market and the greater first-mover advantage to established broadcasters.
“Sky’s consolidation into a larger European broadcaster fortifies its cash flows in advance of such developments, increases its market cap closer to the size of the main threat to its dominance, BT Group, and makes for a much more cost-efficient operating basis, not least with a view to taxation.”
Commenting on the acquisition, Sky’s group chief executive, Jeremy Darroch, said: “We have the opportunity to create a business that can lead and shape our industry in the future. Customers will benefit as we launch exciting new services, bring them even more great TV and accelerate innovation across all of the markets in which we operate.
“By joining together, we will share our strengths and expertise while retaining a strong identity in each country where we operate. The opportunity ahead is substantial and we believe the new Sky will be good for customers, content creators and shareholders alike.”
