The UK’s biggest pay TV broadcaster, Sky, is about to be taken over by Rupert Murdoch’s 21st Century Fox. It’s a deal which we’ve seen mooted for a number of years, and was originally supposed to go through as the phone hacking scandal broke and put the kibosh on any takeover plans.
Now, it seems like little will stand in the way of 21st Century Fox as it strives to take over the 61% of Sky that it doesn’t already own. As part of the deal, Sky’s shareholders will receive £10.75 for each share, valuing the entire company at a remarkable £18.5bn.
However, it’s far from a done deal. The Culture Secretary, Karen Bradley, will have 10 days to decide whether the Fox bid raises public interest concerns – in this case, media plurality. There are genuine concerns regarding the amount of control which Rupert Murdoch has over UK media, and Mrs. Bradley can ask the regulator Ofcom to examine the deal.
Joining the chorus asking for Ofcom to investigate is Tom Watson, the shadow culture secretary, 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."
Presuming the deal goes ahead, though, how will 21st Century Fox’s takeover of Sky affect you, your contract or what you pay. Let’s take a look.
Why is Sky being bought now?
One of the first questions most people will have about the deal to buy Sky is ‘why now’? After all, with a controlling stake in Sky, what’s the advantage of owning the entire business?
Well, it has to do with multiple factors, but primarily, it has to do with Brexit. With the cost of buying British down 15%, it’s never been cheaper to buy a major company like Sky outright, which makes the timing of this purchase to crucial.
It’s also important to note that these last 5 years have seen Sky go from a UK only operation to one which dominates massive swathes of Europe thanks to the acquisition of Sky Italia and Sky Deutschland, which have expanded Sky’s customer base to an astonishing 22 million.
In a call to analysts, James Murdoch, chief executive at Fox and Sky said "Sky is much more than a satellite distribution company, it's a creative, commercial and consumer powerhouse,"
Clearly then, the purchase of Sky gives 21st Century Fox a strong foothold across Europe for a knocked down price, but there are other things to consider. With the size of Sky in 2016, the cost of negotiating rights deals would come right down, also.
Will this make prices go up?
The answer to that is as yet unknown, but it’s unlikely in the short or medium term. If you’re looking to get a pay TV contract, it might even mean lowered prices.
With a long way to go before the ratification of such a deal, the companies behind our favourite premium TV services will be on the scramble to add as many long term customers to their ranks as possible, in order to prepare for the changing landscape. That might well mean the cost of contracts coming down, which is only good news for those still in the market.
Will this make alter your Sky contract or make it void?
No, your Sky contract will remain the same, regardless of who owns the company. Further to that, it’s not possible for Sky to raise the cost of your contract mid-way through, as it would break the terms and therefore allow you to leave without penalty.
So, if you’re uneasy about the prospect of Sky being taken over and its implications for your contract – don’t be, you’re perfectly safe. If you do want to leave your contract, contact Sky directly to find out the cost and implications.
Will the takeover affect Sky’s planned expansion into mobile phone contracts?
If your attentions been captured by the news that Sky are to launch their own mobile phone network, piggy backing on O2s infrastructure, you shouldn’t be alarmed over the news of the takeover.
In fact, the launch of the mobile network is part of the reason why 21st Century Fox are so interested in Sky. Quad-play deals bundle TV, home phone, mobile and broadband into one single package and are set to take off in the UK and Europe in a big way. The ability to offer such a package to consumers is predicted to encourage significant growth for Sky, which should mean it stays within the new Sky’s plans.
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