LONDON (Alliance News) - British Sky Broadcasting Group PLC Friday said it will acquire 21st Century Fox Inc's holdings in Sky Italia and Sky Deutschland for a total of GBP4.9 billion in cash, plus BSkyB's 21% stake in the National Geographic Channel, to form a new enlarged business, as it also reported a fall in pretax profit in the year to end-June.
The much anticipated acquisition will consist of GBP2.07 billion in cash and the transfer of the National Geographic stake, valued at GBP382 million, for Fox's 100% ownership of Sky Italia, plus GBP2.9 billion in cash for Fox's 57.4% stake in Sky Deutschland. BSkyB also will make an offer to the minority shareholders in Sky Deutschland at EUR6.75 per share.
BSkyB said that the acquisitions are expected to be at least neutral to earnings per share in the second full financial year of ownership, and will strongly add to earnings thereafter.
To part-fund the acquisitions, BSkyB announced plans to place 156.1 million new shares, around 9.99% of its existing issued share capital. The placing price will be decided at the close of the book-building process, it said. Fox, which has a 39.14% shareholder in BSkyB, will subscribe for 61.1 million shares to maintain its existing shareholding in the company.
The broadcaster proposed a total dividend of 32.0 pence for the financial year ended June 30, up from 30.0 pence in the previous year.
BSkyB posted a pretax profit of GBP1.08 billion for the financial year, up from GBP1.26 billion in the previous year, as revenue rose to GBP7.63 billion from GBP7.24 billion. Profit was hampered by a step-up in Premier League costs and continued investment into BSkyB's connected services.
Under the new three-year Premier League deal BSkyB pays a flat amount of GBP760 million in licensing fees per year for this year and each of the two subsequent years, an increase of GBP220 million per year compared to the previous rate.
Revenue figures slightly beat consensus forecasts; analysts expected BSkyB to post revenue of GBP7.61 billion.
Retail subscription revenue rose 7%, due to strong product and customer growth and price rises in the year. BSkyB's commercial business saw advertising revenue up 7%, boosted by a first time contribution from its AdSmart service, and wholesale revenue up 3% as renewed carriage agreements and price increases were partly offset by lower customer volumes.
Other revenue was up 10% due to a strong performance from Sky Bet.
BSkyB added 3.1 million new paid-for-products during the year, up 23% on the previous year. The company added 341,000 net new broadband additions, including 50,000 in the fourth quarter.
"Looking ahead, we see a broader opportunity for growth than ever before as we bring our core products to more customers, and open up new revenue opportunities. After a successful year of investment, we are well placed to exploit these opportunities and continue to deliver growth and returns for shareholders," said Chief Executive Jeremy Darroch in a statement.
Shares in BSkyB were trading down 3.7% at 890.50 pence Friday morning, shortly after market open.