Is Murdoch Closer to Time Warner on $9B BSkyB Deal?

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July 25 (Bloomberg) -- MacQuarie Bank’s Guy Peddy discusses the deal by Twenty-First Century Fox to sell its pay-TV businesses in Italy and Germany to British Sky Broadcasting Group for $9 billion and how it plays into Fox’s pursuit of Time Warner. He speaks with Guy Johnson on “The Pulse.”

Will be good.

The valuations of the asset are pretty solid, at the bottom end of the range.

Given this deal has been talked about for a few weeks, i don't think it is a major surprise.

Was there pressure from mr.

Murdoch to do the deal?

The timing is what he is looking at doing in the u.s. is very close.

Perhaps there was timing pressure to get the deal done.

This has been in the pipeline for a while.

It has been an intention of sky business in the u.k. to transfer its skill set to the european assets.

How big is the skill set gap?

There is a big gap on the trends of development.

The italian and german businesses of sky are only -- profitability is relatively small.

We are on a learning curve.

They are behind so issues about bundles, over-the-top service, those are skill sets that scott u.k. can have that it can transfer to germany.

There is some cost to those.

The fact that you can get more bang for your buck by transferring them to other businesses is good news.

You can explore the development and other markets.

It means that sky italy and in germany have developed their own products as well.

Which have been replicated in the u.k. you create duplicity you do not need.

Those are the things you can see positive evolutions.

The concern i would have would be that you have to invest a lot of these businesses to get them up to speed.

Your senses that is not the case.

Sky's trajectory has been invest a lot of cash flow, stocks will take the benefits.

I was worried that you would see that in germany as well.

There is content investment, where we are in the cycle in italy and germany.

Several years away from the next major option.

The other major cost is the acquisition of customers.

That comes on a marginal basis every time you signed up a new customer.

That is where the investment spend would be, that would be spent anywhere.

The question is whether this would be accelerated.

I'd are spending more in the short-term because they accelerate growth drivers?

It is not necessarily jeopardize the cash flows of the u.k. or even the italian enterprises.

What about the premier league?: there are things you can spend your money on and on things you do not spend your money on.

They need to spend their money on the premier league.

How big a force is this?

The premier league is core to the sky sport franchise.

The risks are that they are spending less time, $700 million to $800 million.

That could go up another 50%. they will have to be in that auction at the end of the year.

There is no definite timetable.

That is the current expectation, they will charge you to send what they've got at least.

Are you happy they are spending large amount of money on an m&a deal at the same time they are about to spend large amounts of money on a content acquisition deal?

That makes it interesting from a financial perspective.

I am sure they have given themselves some flexibility.

The sky ongoing cash flow can sustain easily either $.5 billion funding if the premier league -- and to pray like rights.

Are you happy with the way this is being funded?

The fact that they put an equity element and it is comforting.

Credit guys are going to be more relaxed.

The company expects to reaffirm its credit rating.

They have had conversations and will have affirmations of it later.

Keeping the current credit rating is key and that is the reason they have the 2% equity element.

M&a in media continues?

Around europe, and media looking to buy for their content assets.

You've seen that in spain more recently.

That would gain scale.

Buying pay-tv platforms and key content is something that a lot of european operators -- that applies on both sides of the atlantic?

Sports rights are key to a

This text has been automatically generated. It may not be 100% accurate.


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