COMPANY TOWN

Murdoch's Fox to sell European TV systems for $9.3 billion

Fox's planned sale of the European pay TV systems would give it cash that may be used for bid for Time Warner

21st Century Fox is selling its interest in pay-TV systems in Germany and Italy as part of a $9.3-billion deal that will give Rupert Murdoch's media company a big pile of cash.

Analysts have speculated that proceeds from the sale, which had been expected, could help finance Fox's proposed takeover of media giant Time Warner Inc.  Earlier this month, Time Warner rejected Fox's $80-billion offer, but most people expect the Murdoch family soon will up the ante with a higher bid.

Friday's transaction was complicated. Fox agreed to sell its interests in the two European systems -- Sky Italia and Sky Deutschland -- to British Sky Broadcasting, the giant pay TV service in Britain. 

The deal is expected to make British Sky Broadcasting a leading pay TV operator in Europe. 

Meanwhile, Fox owns 39.1% of British Sky Broadcasting -- a company that becomes even more valuable with the addition of the Italian and German pay-TV systems.

Fox said it would transfer Sky Italia, which it wholly owns, and its 57%  interest in Sky Deutschland to British Sky Broadcasting (known as BSkyB) in exchange for cash and assets valued at $9.3 billion.

The cash component of the deal is approximately $8.6 billion. Fox also will assume BSkyB's 21% interest in National Geographic Channels International, increasing Fox's ownership stake to 73%.

Fox said it would also spend $900 million to buy shares in BSkyB, which previously announced an equity offering, to maintain Fox's 39.1% stake in the British broadcasting giant.

Fox's net, after-tax, cash proceeds are estimated at $7.2 billion -- money Fox could use to buy Time Warner.  However, Time Warner is trying to make it more difficult for Fox to acquire it, including earlier this week adopting an amendment to its bylaws that aims to thwart dissident shareholders who might be more amenable to a sale to Fox.

“This transaction significantly enhances liquidity on our balance sheet to support our key operating principles including the consistent return of capital to shareholders," Fox Chief Operating Officer Chase Carey said in a statement.

The transaction with BSkyB is subject to regulatory approvals and the consent of BSkyB stockholders.

“Ultimately, a pan-European Sky is good for customers, who will benefit from the accelerated technological innovation and enhanced customer experience made possible by a fully integrated business," James Murdoch, co-chief operating officer of 21st Century Fox, said in a statement. 

Three years ago, Fox tried to buy the majority stake in BSkyB, but withdrew its bid during an outcry over revelations that reporters at Murdoch's News of the World tabloid in London had been eavesdropping on celebrities, sports figures, crime victims and even members of the British royal family.

Twitter: @MegJamesLAT

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