BSkyB considers bid for Spain’s Digital+

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British Sky Broadcasting, the UK satellite group, is considering making a bid of more than €2.5bn for Digital+, the Spanish pay-TV platform, which would mark its first foray outside the UK and Ireland since an ill-fated move into Germany in 2000.

Digital+, which Grupo Prisa is expected to auction this year, had been in the sights of News Corp, the US media conglomerate which owns 39.1 per cent of BSkyB.

However, News Corp’s simultaneous pursuit of Premiere, the German pay-TV group, has sparked a debate at Rupert Murdoch’s media group about the funds it is willing to allocate to expanding its western European footprint.

James Murdoch, Mr Murdoch’s younger son and the chairman of BSkyB, has been charged with building on assets such as BSkyB and Sky Italia in his other role as chief executive of News Corp Europe and Asia.

People familiar with the debate, first reported by New Media Markets, cautioned there had been no decision taken as to whether to proceed, but that BSkyB’s strong free cash flow could allow it to finance an acquisition at a time when News Corp was pursuing several other possible deals.

BSkyB would not comment.

How BSkyB would finance any offer was not immediately clear on Thursday night, but it had net debt of £1.91bn (€2.4bn) at March 31, and generated £614m in cash from operations in the first nine months of the year.

Prisa, Spain’s largest media group and the owner of El Pais, is expected to sell Digital+ to repay debts incurred in this year’s highly-priced buy-out of other shareholders in Sogecable, the TV group that owns Digital+ and Cuatro, the free-to-air channel.

Although advisers may issue confidentiality agreements before the August holiday, the auction is not expected to start in earnest until September. BSkyB or News Corp could face strong competition for the Spanish assets. Potential bidders for Digital+ are expected to include Vivendi, Telefónica, ONO and Orange, France Telecom’s mobile arm.

Alternatives, such as an infusion of capital into Prisa from Carlos Slim, the Mexican telecoms magnate, could also derail the planned Digital+ disposal, for which Prisa is reported to want a price of €3.3bn.

Any bid by BSkyB could unsettle independent investors, reawakening concerns about a “Murdoch discount” – the theory that other investors come second to the long-term ambitions of News Corp.


source: The Financial Times

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