BSkyB gets 24% of Premiere World in $1.49 bil deal

PARIS — In his most significant foray into continental Europe yet, Rupert Murdoch will announce today that his BSkyB has taken a 24% stake in the pay TV operations of Germany’s Kirch Group.

“The signing of this agreement is imminent and should be made official today,” Murdoch said in an interview with France’s Le Figaro newspaper. “This company is going to be able to develop itself and to move ahead, knowing that it is financially healthy and solid.”

It was not clear exactly when the interview, to be published today, was carried out.

German pay TV mogul Leo Kirch and Murdoch have acknowledged they are in talks about Murdoch’s British pay TV service BSkyB taking a minority stake in Kirch’s pay TV biz.

Germany’s Sueddeutsche Zeitung reported Friday that BSkyB wanted to take a 24% stake in Kirch’s Premier World service for DM2 billion ($1.03 billion) in cash and shares.

But Murdoch told Le Figaro that BSkyB planned to inject $1.49 billion into Premier World — $512 million in cash and the rest in BSkyB shares.

“Kirch, for its part, will carry out a capital increase in Premiere World, bringing ($512 million) which will be added to its past investments,” Murdoch said.

“In total, the recapitalization will be for ($2 billion). Kirch will have 4.3% of BSkyB and we will have 24% of Kirch Pay TV,” he added.

He said negotiations between the two groups had taken three months.

Veto power

The Sueddeutsche Zeitung reported that Murdoch would have a veto over certain business decisions at Kirch Pay TV and Premier World, but a Kirch spokesman declined to comment on the report.

Murdoch did not comment on that possibility to Le Figaro.

Germany’s competition watchdog, however, said Friday that Murdoch’s investment may require approval by the European Commission.

Tough Italo competish

Murdoch also said he expected competition in Italy to be tough as his News Corp. empire plays a more important role in that market via a 35% stake in fledgling Italian pay TV company Stream.

“In Italy we are in competition with Telepiu … we think competition will be very tough. The Italian public will have the choice between two good platforms, as in France and Spain,” Murdoch said.

He declined to comment on which other European markets he was interested in entering.

“Normally we are interested in taking minority stakes where opportunities exist and through which we can bring our know-how and financial backing,” he said.

“We currently have two or three important investments in continental Europe, all of which have been made at the invitation of companies wanting our participation,” he said, citing an invitation by German media group Bertelsmann to join it in its Vox commercial channel.

(Reuters contributed to this report.)

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