Rupert Murdoch’s News Corp yesterday revealed a bid of £7.8 billion (US$11.5 billion) in cash for the near 61 percent of British pay-television group BSkyB that it does not own yet. However, BSkyB rejected the informal offer of £7 per share, saying it was too low and that it would be prepared to support a formal bid only “in excess of 800 pence per share.”
“News Corp and the BSkyB Independent Directors have been unable to reach a mutually agreeable price at the current time,” News Corp said in a statement.
“However, both parties have agreed to work together to proceed with the regulatory process in order to facilitate a proposed transaction,” it said.
News Corp currently owns 39.1 percent of BSkyB. The price of shares in the television business rocketed by almost 21 percent to £7.25 in early London trade.
Chief operating officer Chase Carey said the offer proposed by News Corp represented a premium of 27.5 percent over BSkyB’s average share price for the past year.
“We believe that this is the right time for BSkyB to become a wholly owned part of News Corporation with its greater scale and broader geographic reach,” he said. “For News Corporation, our proposal presents an opportunity to consolidate a core business with which we have been closely associated for over two decades.”
“News Corporation will also benefit from increasing the geographic diversification of our earnings base, reducing our exposure to cyclical advertising revenues and increasing our direct consumer subscription revenues,” Carey added.
The bid for all of BSkyB comes after the British group recently posted soaring quarterly profits and data showing it was fast closing in on securing its target of 10 million paying customers in Britain.
BSkyB, in which Murdoch’s News Corp is the biggest single shareholder, offers live English Premier League football, as well as telephone, Internet and high-definition television services — which give better picture quality.
On Monday, News Corp also announced that it had bought an electronic reading platform developed by Hearst and invested in a company which seeks to help news organizations make money on the Web.
The acquisition of e-reader platform Skiff from US newspaper and magazine publisher Hearst Corp and the investment in Journalism Online are the latest moves in Murdoch’s campaign to get readers to pay for content online.
Financial terms of the agreements were not disclosed, but Journalism Online said News Corp had bought a minority stake in the company launched by three US media executives last year and would have a seat on the five-member board.
“Today’s developments underscore News Corporation’s ongoing commitment to create strong business models that support journalism at a time of great change in our industry,” News Corp chief digital officer Jon Miller said.
“Both Skiff and Journalism Online serve as key building blocks in our strategy to transform the publishing industry and ensure consumers will have continued access to the highest quality journalism,” Miller said in a statement.
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