Sky Investors Weigh Pros, Cons Of Pay-TV Provider's 'Sky Europe' Plan

Investors' usual concerns about pay-TV provider Sky -- subscriber growth, revenue per user, even the cost of Premier League football -- "have faded in recent weeks, as anticipation grows about the company's grand European plan," according to Henry Mance of the FINANCIAL TIMES. Sky "is near an agreement to buy majority stakes in Sky Deutschland and Sky Italia, from Rupert Murdoch's 21st Century Fox." The move "would create one of Europe's largest pay-TV players," with 19 million subscribers in the U.K., Ireland, Italy, Germany and Austria. Combining the operations "could generate synergies" -- £100M ($170M) by '17, or less than 1% of the total cost base. For BSkyB investors, Sky Europe "would also give them exposure to the German market, where pay-TV penetration is lower and there is greater growth potential." Research group IDATE states that "only one in five German households pays for premium TV channels," compared with one in two in the U.K. (FT, 7/23).