How 21st Century Fox (Nasdaq:FOXA) is planning to use the $7.2 billion it will be adding to its coffers after agreeing to terms to sell its Sky Italia and Sky Deutschland pay-TV stakes to BSkyB is less clear than the pay-TV operator’s motives.
The sale gives BSkyB 100% ownership in the Italian satellite TV operator and 57.4% German operator Sky Deutschland, and helps position it as a true European operator with more than 20 million subscribers is three of the four biggest European markets, with 97 million addressable households, 66 million of which have not taken pay-TV.
BSkyB has more than 11.7 million subscribers in the United Kingdom, 3.7 million in Germany and 4.8 million in Italy.
Over the past five years, BSkyB has more than doubled its paid-for subscription product base and increased revenues by 43% as a result of its strategy of broad-based growth.
The size gives it an edge in negotiating for content offers operations synergies and also sets it up for more growth opportunities.
“This transaction will create a world-class, multinational pay-TV business with enhanced headroom for growth and immediate benefits of scale,” said Jeremy Darroch, CEO of BSkyB. “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.”
For 21st Century Fox, the immediate advantage, obviously, is cash. The company remains in pursuit of Time Warner, and the extra jingle will allow it to add weight to its original bid for Time Warner.
You can see the press release here.