BSkyB to pay $9 billion to create Sky Europe

Britain's BSkyB (BSY.L) has agreed to pay $9 billion to buy Rupert Murdoch's pay-TV companies in Germany and Italy, taking its hunt for growth into Europe by creating a media powerhouse with 20 million customers. BSkyB, in which Murdoch's 21st Century Fox (FOXA.O) 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 per cent of its issued share capital. The deal adds to a flurry of consolidation in the global media sector and Fox is expected to use the proceeds to fuel its pursuit of Time Warner (TWX.N), which recently rejected Fox's initial $80 billion bid. BSkyB had flagged 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 per cent, 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,’ according to Reuters.