From BBC

The move was announced along with the company’s annual results, which show pre-tax profits fell slightly to £1.2bn from last year’s £1.26bn.

BSkyB also reported revenues rose by 7%, with strong demand “across the board” for its services.

It said Sky Sports viewing share was at a seven-year high, boosted by the open race for the Premier League title.

Part of BSkyB – 39% – is owned by Rupert Murdoch’s 21st Century Fox. That company owns 100% of Sky Italia and 57% of Sky Germany.

BSkyB’s chief executive, Jeremy Darroch, said: “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.”

Savings

Majority stake holder 21st Century Fox wants to pass the ownership of the Sky businesses to BskyB to free up cash for its bid for media giant Time Warner, the company that owns Game of Thrones maker HBO and news business channel CNN.

It also thinks the pay-TV channels will be more profitable if run by one dedicated company.

The company hopes the new structure will save it £200m by the end of the second financial year with further savings to come.

BBC business editor, Kamal Ahmed, points out senior observers say that having pulled the European Sky businesses under one roof, 21st Century Fox could tidy up the business structure further by buying the other 61% of BSkyB it does not already own.

BSkyB shares were down some 5% on the news, as it will also bring higher debt levels and a stop to its current practice of buying back shares.

BSkyB broadcasts to 10 million homes in the UK.

A combined Sky Europe would have 20 million customers.

For more on this story go to: http://www.bbc.com/news/business-28479200

 

Related story:

21st Century Fox withdraws bid for Time Warner

from BBC

Rupert Murdoch’s 21st Century Fox has withdrawn its bid to purchase US entertainment giant Time Warner for an estimated $80bn (£47bn).

Time Warner rejected Fox’s initial offer in July.

The company wrote in a statement that Time Warner had “refused to engage with us to explore an offer which was highly compelling”.

It added that the reaction in the company’s share price since the proposal was unveiled undervalued Fox.

Fox’s share price has declined by 11% since news of the takeover was revealed.

Meanwhile shares in Time Warner plunged more than 11% in after-hours trading after the surprise news of the withdrawal was announced.

“Time Warner’s Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders,” said Time Warner in a statement.

Altered landscape

A merger between the two giants would have significantly altered the media industry in the US and created one of the world’s largest media conglomerates.

Time Warner owns several lucrative cable channels – including HBO, TNT, and TBS – whereas Fox is the owner of the dominant Fox News channel in the US.

The acquisition offer was seen as a way for Fox to stay competitive as other big players in the industry, including Comcast and AT&T, also engage in mergers and take over offers.

Some observers wondered if the withdrawal was just a ploy by Mr Murdoch to drive Time Warner’s share price lower as part of his larger takeover strategy.

“This could easily be part of their negotiating strategy,” said Brett Harriss, an analyst with Gabelli & Co.

As part of the announcement, Fox also said it would authorise a $6bn share repurchase programme.

That pleased investors, who sent shares in the firm up over 7% in trading after markets were closed.

Both companies are set to report their second-quarter earnings on Wednesday.

For more on this story go to: http://www.bbc.com/news/business-28668539