When it comes to pay TV, there’s no bigger company within the UK than Sky. Created from the buyout of the failing British Satellite Broadcasting and merged with Sky Television Plc back in 1989, BskyB (now simply Sky) endured a rocky start to life. The subsequent decades, however, have seen the struggling pay TV supplier become the dominant force in the market, outmuscling the likes of BT, Virgin and a host of smaller suppliers.
More recently, the purchases of Sky Italia and Sky Deutschland have meant that Sky has been able to stretch out across Europe, unify their offerings and add a mountain of new customers to their service.
Now, Sky is about to be taken over by Rupert Murdoch’s 21st Century Fox. It’s the second time such a deal has been proposed, the first of which was scrapped as the phone hacking scandal broke in 2009. However, unlike the 2009 deal, the 2017 takeover of Sky will cost a great deal more.
The deal will see 21st Century Fox take the remaining 61% of Sky that it doesn’t presently own. As part of the deal, Sky’s shareholders will be bought out and receive £10.75 for each share. That places a value on the company of £18.5 billion.
Though accepted by Sky’s board and shareholders, the path isn’t yet clear for the takeover. The Culture Secretary, Karen Bradley, can still decide to launch an investigation into whether the takeover raises public concerns. In this case, those concerns would be around media plurality. If requested, Ofcom would be tasked with examining the deal.
It’s a move which has been supported by the Shadow Culture Secretary, Tom Watson, who said: “When she stood on the steps of Downing Street this summer, the prime minister said to the people of this country that ‘when we take the big calls, we’ll think not of the powerful, but you’. This is a big call. The government needs to decide whose side it’s on.”
Nevertheless, it’s expected that the deal will go ahead. So how will that affect you? Join us as we answer the biggest questions.
Will this drive prices up?
As yet, nobody really knows the answer to that question. However, in the short to medium term it’s fair to say that price hikes are unlikely.
In fact, it’s more likely that if you’re shopping for a pay TV contract in the near future you’ll see lower prices. Why?
Well, with a long way to go before the ratification of the takeover, the companies behind some of our other favourite premium TV services will be looking to lure in as many new customers to their ranks as possible before the landscape changes dramatically. That could lead to special offers, steep discounts and more.
Will this change or void your contract with Sky?
Of particular interest to customers using the Sky telephone number is whether the takeover will change or void their contract with Sky. The good (or bad) news on that front is that no, your Sky contract will remain unchanged.
Additionally, it won’t be possible for Sky to raise the cost of your contract midway through your term, as it would break your contract and allow you to walk free.
Will the takeover affect Sky Mobile?
Sky’s recent announcement that they’re getting into the mobile landscape with their own network caught the entire industry’s attention, but will 21st Century Fox’s takeover stop that?
The answer, we feel, is a resounding no. In fact, it’s much more likely that Sky Mobile is part of the reason why Fox are so keen on the takeover. Quad-play deals bundle mobile, home phone, TV and broadband into a single package and have proven extremely popular in the UK for companies like Virgin and BT. As such, the potential to offer such a deal represents a significant growth opportunity for Sky.
Perhaps the biggest question on people’s minds is ‘why now’? Well, it’s a number of factors.
Primarily, the timing is down to Brexit. As the value of Sterling crumbled in the aftermath of the vote to leave, the cost of buying British companies fell dramatically. It’s also important to note that the last 5 years have seen Sky go from a UK only operation into a pan-Europe giant with a customer base swelling to over 22 million.
James Murdoch said it best in a call to analysts earlier in the week when he said: “Sky is much more than a satellite distribution company, it’s a creative, commercial and consumer powerhouse,”
Under 21st Century Fox, Sky would have the power to negotiate much harder for a range of rights and even expand out to other markets around the world.