BSkyB buys Murdoch's German and Italian stakes, creates Euro pay TV giant

U.K. pay TV giant British Sky Broadcasting Group has agreed to pay just over $9 billion to 21st Century Fox to acquire its sister companies in Germany and Italy.

With the deal to purchase 100 percent of Sky Italia and 57.4 percent of Sky Deutschland, BSkyB says it will create a "world-class multinational pay TV business," with over 20 million subscribers spread across Germany, Italy, Austria, the U.K. and Ireland.

For their part, Fox and its chief executive, Rupert Murdoch, will bolster their wallets for their prime U.S.-based objective, acquiring Time Warner, Inc. Fox said it expects to net, after taxes, about $7.2 billion from the BSkyB transaction.

Most of the deal will involve cash, but new shares and debt will also factor into an equation that is still subject to regulatory and shareholder approvals. The Wall Street Journal notes that there are no obvious regulatory hurdles, but price may be an issue for shareholders on both sides.

While there is a general assumption on Wall Street that targeting Time Warner is Murdoch's principal concern, there is also plenty of evidence to suggest the BSkyB deal exists on its own merits.

BSkyB is facing increased competition in the U.K. from BT (NYSE: BT), and it has a renewal of its crucial Premier League soccer sports rights coming up in 2015. A combined Sky Europe gives the group more leverage through scale. 

For more:
- read this Wall Street Journal story
- read this Deadline Hollywood story

Related links:
Investment analyst: Murdoch would take HBO out of pay TV bundle, target Netflix
Murdoch bidding on Time Warner Inc. could reach $91B, analyst says
BSkyB in talks with 21st Century Fox for German, Italian pay-TV assets