Britain’s BSkyB is to pay the equivalent of 6.7 billion euros to buy Rupert Murdoch’s pay-TV companies in Germany and Italy.
The deal, which will create a powerhouse with 20 million customers, is the latest consolidation in the global media sector.
BSkyB is taking the some say risky step of pursuing future growth through European expansion of its pay-TV model operating in Britain, Ireland, Germany, Austria and Italy.
Murdoch is expected to use the money in his pursuit of Time Warner, which recently rejected an initial $80 billion takeover bid from him.
BSkyB, in which Murdoch’s 21st Century Fox is also the largest shareholder, will pay for the deal using cash, debt, its stake in a TV channel and a placing of shares that represents around 10 percent of its issued share capital.
BSkyB had spoken of a possible deal for Sky Deutschland and Sky Italia in May. The price announced on Friday was slightly lower than expected by some analysts and the cost and revenue benefits laid out by BSkyB were greater than anticipated.
BSkyB’s shares still fell 3.4 percent, pulled lower by the plan to issue stock and suspend a share buy-back.
“It is a bit of a step in the unknown for Sky,” said Conor O’Shea, an analyst at Kepler Capital Markets. “For the first time, it will go from UK-focused to European and be asked to prove that it can add value from being larger.”
BSkyB dominates British pay-TV and hopes to apply the same formula in Italy and Germany, where pay-TV is not yet as popular or as profitable.
Of 97 million households in its markets, 66 million are yet to take pay-TV.