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Sky’s Rising Share Price Pressures Rupert Murdoch To Close BSkyB Deal

City analysts think News Corp could be forced to pay up to £10.2bn ($16.2bn) for the 61% of BSkyB it doesn’t own. Sky’s shares rose by 11% after announcing strong first-half results this morning. Pre-tax profits at BSkyB rose to £467m in the last six months of 2010, with revenues up 15% to £3.2bn. Rupert Murdoch has flown into London to personally oversee negotiations with the British government. City analysts predict that, with results as good as these, the longer the deal is delayed, the more BSkyB’s share price will rise – and the more News Corp will be forced to pay. Its offer of 700p per share, valuing the deal at £7.5bn, has already been rejected. News Corp is sitting on a £5.42 billion cash pile. The pressure will be on to close the deal before News Corp shareholders question whether the company can really afford it. RBS, the City investment bank, tells me it expects the Sky deal will go through before June. “News Corp wants the deal to close asap and will work with the regulator to achieve that,” says Paul Richards, director of equity research at Numis.

Murdoch’s arrival comes during a week when his News Corporation has become the news, rather than reporting on it. First, there’s UK culture secretary Jeremy Hunt giving the Murdochs more time to come up with ways to reduce News Corp’s media influence if he allows the deal to go through. … Read More »

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Sky Gets 10M Subscribers Ahead Of Sked

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.

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Puttnam: Murdoch Takeover “Extremely Damaging To Informed Democratic Debate”

Speaking in the House of Lords, the UK equivalent of the Senate, David Puttnam said that News Corp’s bid to take control of BSkyB posed a threat to democracy. Here are excerpts from the speech given by the one-time Columbia Pictures boss:

My Lords… I had the honour of entering your Lordships House thirteen years ago tomorrow. Since that time there have been three or four really big issues with which I’ve consistently tried to engage – in part because they relate to experiences gained in my former life, but also because I believe they represent the type of issues upon which rests the future of the type of society most of us would wish to live in… My Lords, the purpose of this afternoon’s debate is to draw attention to the possibility that we are on the edge of a very slippery slope – one that could find us falling further and further under the influence of a single, US-based owner, with a highly questionable interest in the benefits of a diverse and flourishing plural media here in the United Kingdom. So why this debate, and why now?

The primary reason My Lords is that News Corporation yesterday notified the European Commission of its intention to purchase the 61% of BSkyB that it does not presently own. As I’ve already mentioned, this morning we heard the welcome news that this proposal had been referred by the Secretary of State, to Ofcom. It’s my most sincere hope that the Coalition’s proposed ‘trimming’ of Ofcom’s powers will not result in any diminution of its capacity to exercise those powers in respect of important matters such as this.

There, are of course, a number of aspects to media plurality – notably the Government’s proposals to repeal the local “cross-media” ownership laws, but this afternoon I only have time to focus on the really big issue resulting from News Corporation’s power, reach and influence. It’s my contention that if regulators and legislators in Europe and the UK remain supine, and simply wave this proposed acquisition through, the consequences for the citizens, as well as the political class in this country could become deeply troubling. The purchase of these shares would give News Corporation an unprecedented level of control over the UK media, one that to my mind has the potential to be extremely damaging, not just in respect of media plurality, but to informed democratic debate as a whole.

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News Corp’s Sky Pays Rupert’s Daughter Liz Murdoch 40% Less For TV Shows

BSkyB paid Liz Murdoch’s Shine Group £6 million ($9.3 million) for programming last year, the company said in its annual report. That is 40% less than the £10 million it paid Murdoch, sister of non-executive chairman James Murdoch, and her Shine Group last year. Shows that Shine, the UK’s biggest independent TV producer, has made for Sky include a revival of 80s game show Gladiators.

Sky’s directors appear confident the company’s share price is going to rise further. In June News Corp bid £7.8 billion for the 61% of Sky it doesn’t own. News Corp’s offer was rebuffed by Sky, which is holding out for 800p a share. Jeremy Darroch, CEO of BSkyB, has more than tripled the number of shares he owns in Sky to 230,046 compared with 60,000 shares last summer. This means Darroch could collect £6.6 million if the 800p-a-share deal does go through. CFO Andrew Griffith, 39, has been similarly bullish, acquiring 52,000 shares on top of the 5,000 he already owned. Last month, News Corp’s deputy chairman Chase Carey appeared to rule out increasing the offer.

Darroch pocketed a 14.6% pay rise in the year to June 30, bumping up his total package to £2.7 million. Darroch hit his performance targets, triggering a £1.7 million bonus. Combined with his £866,250 salary and other benefits, the CEO’s total pay was lifted up from £2.3 … Read More »

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BBC Boss Mark Thompson To Lay Into Sky

Thompson will attack Sky tonight during his Mactaggart lecture speech at the Media Guardian Edinburgh International Television Festival. Thompson will point to the vast scale of Sky and its influence over the UK broadcasting industry. He will compare the £2 billion the Corporation spends on programmes with the estimated £100 million Sky spends on original UK content. This is despite the BBC’s annual £3.6 billion licence fee being smaller than the £5.3 billion Sky earned last year. The BBC Director General is taking the gloves off and going on the offensive tonight, telling staff in a recent email that “it’s time to take on some of the BBC’s critics head-on”. Last year, News Corp director James Murdoch used the lecture to delivering a withering attack on the BBC, describing its scale as “chilling”.

Tonight’s keynote speech is seen as make-or-break for Thompson, who faces growing unrest among BBC staff. BBC employees are currently being balloted on whether to take strike action over plans to make their pensions less generous. And they smell double standards when top BBC managers opt to stay in London while the rank and file are forced to move to Salford, near Manchester. The BBC is moving more production to the north of England in order to stop the Corporation being such a metropolitan broadcaster.

In a nod to the challenges faced by the BBC’s commercial rivals, Thompson will … Read More »

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Sky To Become HBO’s Home In Britain

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.

The output deal also gives Sky on-demand rights to hit HBO shows such as The Sopranos and Six Feet Under.

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 … Read More »

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