Rupert Murdoch’s opening bid for 100% ownership of BSkyB, the dominant U.K. paybox, has been rejected by the firm’s independent directors — but talks are expected to continue until agreement is reached.
Confirmation of News Corp.’s offer to buy the 61% of the satcaster that it doesn’t already possess sent the price of BSkyB stock soaring in early trading on the London market. At one point the price rose by 21%, later falling back to just under 18.5% and ending the day at…….
The paybox is demanding “in excess” of £8 ($11.78) a share. Murdoch originally offered $9.94 later increasing it to $10.31, which values the company at more than $20.6 billion. This would cost News Corp. $12.5 billion.
The company said it planned to fund the purchase with the available cash on its balance sheet plus borrowed funds.
Chase Carey, News Corp.’s deputy chairman, prexy and chief operating officer, said, “We believe that this is the right time for BSkyB to become a wholly-owned part of News Corp. with its greater scale and broader geographic reach.
“Our proposal presents an opportunity to consolidate a core business with which we have been closely associated for over two decades.”
Murdoch launched Sky as a paybox in 1989 and took over rival British Satellite Broadcasting a year later when it became clear that the local market could not support both.
It has transformed the U.K. broadcasting landscape thanks to the success of BSkyB, which has continued to perform strongly despite a sour economy.
News Corp.’s attempt to own the satcaster lock, stock and barrel is certain to face a regulatory investigation, which could last until Christmas and beyond.
Undoubtedly, it will pose a big headache for Blighty’s new Conservative-led coalition government.
Murdoch’s British papers, led by the big selling tabloid the Sun, were keen cheer leaders for the Conservatives during the recent election.
The Conservatives have traditionally favored News Corp.’s expansion in the U.K.
But the party’s coalition partners, the Liberal Democrats, have voiced concern over Murdoch’s huge influence in the British media — his other interests include the News of the World and the Sunday Times. It is estimated that if the deal to own BSkyB outright succeeds, it would give News Corp. annual U.K. revenues of around £8 billion ($11.9 billion) in the U.K. compared with the £4.6 billion ($6.78 billion) income of its nearest rival, the BBC.