City and media analysts agree that it’s almost certain News Corp will now get approval to buy the 61% of BSkyB it doesn’t own. The deal would cement Rupert Murdoch’s position as the most powerful media magnate in the world. Investec Securities, the investment bank, says it’s now 90% certain the deal will go ahead. Credit Suisse puts the likelihood even higher at 95%. BSkyB’s share price rose by 2% today in the wake of UK business secretary Vince Cable, the man who was supposed to have final veto over the deal, being stripped of his media powers. Brit TV and radio news bulletins have been about little else. Investment bank Nomura says Cable’s removal represents a “big step forward” for News Corp. Cable told 2 undercover reporters from the Daily Telegraph newspaper that he had “declared war” on Murdoch. Cable was supposed to be impartial when weighing evidence from media regulator Ofcom as to whether to refer the deal. News Corp’s bid will now be vetted by culture secretary Jeremy Hunt, a man known to be sympathetic to BSkyB. “It does seem to me that News Corp do control Sky already, so it isn’t clear to me that in terms of media plurality there is a substantive change,” Hunt said in June. Now that he’s got the quasi-judicial role, Hunt will want to be seen as impartial, media analyst Claire Enders tells me. “Jeremy will be at pains to …
James Murdoch has warned the UK government that News Corp could move overseas if the regulator blocks its £7.8 billion ($12.5 billion) bid for BSkyB. News Corp’s European and Asian boss made the veiled threat talking to investment bank analysts in Barcelona. The government must decide whether it wants to risk “jeopardising an £8 billion investment in the UK” with a prolonged investigation, Murdoch said, noting that News Corp could relocate some of its most innovative projects to more “welcoming” countries if the UK blocks its bid for BSkyB. “From India to Italy and to Germany, countries are becoming more welcoming of investment and more welcoming of what we can bring,” Murdoch said.
No wonder Rupert Murdoch is so keen to own BSkyB outright. Having invested so heavily in technology, from digital switch-over right through to 3D, Murdoch wants to reap his investment. Sky’s annual turnover in its last financial year to June 2010 was £5.9 billion. It’s estimated this will grow to over £8 billion by 2016. BSkyB, the UK pay-TV operator, had expected to hit 10 million by the end of this year. Instead, it announced it had achieved the target this morning. Steve Liechti, media analyst with Investec tells me the long-term target looked almost impossible when James Murdoch set it back in August 2004, when subscriber numbers were at 7.4 million. At that point subscriber numbers were only inching up. Compared to the old management – which had just been fixated on share price – James Murdoch spent heavily on new technology including HD. Around a third of customers have now upgraded to HD, while almost 25% take Sky’s broadband and home phone package. “It show how successful the dual approach of ‘halo’ product such as HD and 3D and ‘value’ product strategy has been,” Liechti tells me.
News Corp’s deputy chairman has set his face against increasing its £7.8 billion ($12.4 billion) for the 60% it doesn’t own of BSkyB. Carey has warned the Brit pay-TV giant that Rupert Murdoch’s company has “other options for its cash”. In yesterday’s investor call, Carey described the bid — rejected by BSkyB’s independent board for being too low – as “full and fair.” Although the two companies are unable to agree on price, they have entered into a cooperation agreement. Carey said the immediate focus is on getting regulators to approve the deal. News Corp is due to submit the transaction for European regulatory approval in Brussels within the next few weeks, a process which is expected to take up to one month. The decision could then be handed back to UK regulators. It will be interesting to see what happens next. It’s not as if there are any other bidders out there.
The pay-TV giant has struck an exclusive output deal to be the only place to watch HBO shows from now on. Boardwalk Empire, Martin Scorsese’s series about Atlantic City gangsters, will be the first show to air through the deal in the autumn. Future HBO shows airing exclusively will include Game of Thrones and Luck, executive produced by Michael Mann and starring Dustin Hoffman. The next series of HBO shows such as Entourage and Big Love will also air exclusively on the channel.
Sky is throwing huge amounts of money at programming. It wants to get away from the downmarket image it’s saddled with. Many early adopters lived on council estates – think housing projects – peppering the skyline with satellite dishes. Sky is pulling strenuously upmarket. It’s just announced that it’s taking over ITV’s prestigious arts programme The South Bank Show. And it’s pouring big money into original drama such as Terry Pratchett TV movies and adaptations of crime author Martina Cole.
This year, Sky will spend £1.7 billion ($2.7 billion) on content – most of it on movies and sports rights though. By contrast, ITV will spend £1 billion, Channel 4 £550 million and Channel Five £165 million.
Meanwhile, BSkyB has just announced its fourth-quarter results for the year ending …