Murdoch backs BSkyB European expansion plan

BSkyB is planning a series of takeovers that would turn it into a £22 billion ($A40bn) pay-television giant in Europe, with enhanced clout in the battle for football rights

Sky, 39 per cent owned by Rupert Murdoch's 21st Century Fox, is in talks to buy the tycoon's stakes in Sky Deutschland and Sky Italia. The moves would give it control of companies that sell satellite TV to 8.5 million households in Europe and allow Fox to clean up its holdings so it can concentrate on producing rather than distributing programs.

Sky is already the dominant pay-TV operator in Britain but regards BT as a growing threat. BT paid almost £900m last November for a three-year deal to broadcast live Champions League and Europa League football matches — an audacious gambit seen as a statement of intent and a damaging blow to Sky and ITV, which previously shared the rights.

The American billionaire John Malone, dubbed the "Cable Cowboy", is also a serious competitor in Germany and Britain, where his Liberty Global owns Virgin Media.

Vodafone has also signalled its interest in bidding for content after completing the blockbuster sale of its half of Verizon Wireless in America this year.

Pay-TV operators are also under siege from internet streaming services such as Amazon Prime and Netflix. Their cut-price offerings are beginning to lure customers away from Sky.

The consolidation of Murdoch's European TV stakes is not a new idea, having been mooted for several years. Jeremy Darroch, Sky's chief executive, is understood to have approached Murdoch earlier this year to revive the discussions.

Fox owns 55 per cent of Sky Deutschland and the whole of Sky Italia. The stakes are worth about £6.5bn compared with Sky's market value of £14bn.

The three operators share set-top box technology, and their unification would allow them to bid for sports and entertainment rights across Europe, giving Sky more bulk purchasing power against BT. The deals could be agreed towards the end of summer but are likely to face intense scrutiny from European competition watchdogs.

The stake that 21st Century Fox has in Sky would stay at 39 per cent, according to people close to the talks. The company hopes to avoid the public backlash caused three years ago when the media mogul tried to take full control of Sky, a move that was derailed by the phone-hacking scandal.

Murdoch has reorganised his empire since then, separating 21st Century Fox from News Corporation, which now holds all his newspaper and publishing businesses, including The Sunday Times. The split appeased shareholders who wanted to be able to choose their level of exposure to print and TV in the aftermath of the scandal.