BSkyB, Sky Italia, and Sky Deutschland are merging to create a pay-TV giant with 20 million customers

The British Sky Broadcasting Group (BSkyB) is trying to bring a model that has gained ground in the US and UK—paying for premium sports, drama and on-demand options—to the rest of Europe. BSkyB is acquiring Rupert Murdoch’s Sky Italia and Sky Deutschland, both leaders for pay TV in markets that have a low penetration compared to the rest of Western Europe.

The deal will almost double Sky’s subscribers and expand its growth opportunity by a factor of five. BSkyB will pay Murdoch’s 21st Century Fox £4.9 billion ($8.3 billion) and transfer BSkyB’s 21% stake in National Geographic Channel, worth £382 million ($648.4 million).

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Source: BSkyB

The transaction announcement cites the prevalence of free-to-air broadcasters and a lack of premium pay TV content as reasons for Germany’s low subscriber rates, even though Germany and Austria combined were Europe’s largest market as of December.

All three Sky services currently provide packages for sports and movies, plus HD, video on demand and “Sky Go,” for mobiles, tablets and computers. All of these will remain a focus for expansion. BSkyB also invests in original content, which it could expand into its new properties.

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