Sky Group
Sky Group Limited is a British media and telecommunications conglomerate owned by Comcast and headquartered in London. It has operations in the United Kingdom, Ireland, Germany, Austria, Switzerland and Italy. Sky is Europe's largest media company and pay-TV broadcaster by revenue, with 23 million subscribers and more than 31,000 employees as of 2019. The company is primarily involved in satellite television, producing and broadcasting. The current CEO is Dana Strong.
Formed in 1990 by the equal merger of Sky Television and British Satellite Broadcasting, BSkyB became the UK's largest pay television company. In 2014, after completing the acquisition of Sky Italia and Sky Deutschland, the merged company changed its name to Sky plc.
Since its founding, Rupert Murdoch's News Corporation held 39.14% of Sky Group, and in June 2010 they attempted to buy out the rest of Sky, but the bid was withdrawn in July 2011 following the News International phone hacking scandal that also led to News Corporation splitting into News Corp and 21st Century Fox, the latter of which continued to hold News' stake in Sky. In December 2016, 21st Century Fox made a bid to acquire the remaining shares of Sky, pending government approval. After The Walt Disney Company announced that they were to acquire Fox, Comcast initially engaged in a bidding war, but dropped out to acquire Sky instead, outbidding Fox with an offer for £17.28 per share; Fox sold their stake in October 2018, followed by the remaining shareholders a month later. Following this, Comcast's film studios and US television businesses and other media assets are held by NBCUniversal, which is also under its control and was formed when Vivendi sold 80% of Universal Pictures to the now-defunct General Electric, NBC's then-owner.
Before the acquisition by Comcast, Sky was listed on the London Stock Exchange and was a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £18.75 billion in 2018.
History
BSkyB
Formation
British Sky Broadcasting was formed by the merger of Sky Television and British Satellite Broadcasting on 2 November 1990. Both companies had begun to struggle financially and were suffering financial losses as they competed against each other for viewers. The Guardian later characterised the merger as "effectively a takeover by News Corporation".The merger was investigated by the Office of Fair Trading and was cleared a month later since many of the represented views were more concerned about contractual arrangements which had nothing to do with competition. The Independent Broadcasting Authority was not consulted about the deal; after approval, the IBA demanded precise details of the merger, and stated they were considering the repercussions of the deal to ultimately determine whether BSB contracts were null and void. On 17 November, the IBA decided to terminate BSB's contract, but not immediately, as it was deemed unfair to 120,000 viewers who had bought BSB devices.
Sam Chisholm was appointed CEO in a bid to reorganise the new company, which continued to make losses of £10 million per week. The defunct BSB's HQ, Marco Polo House, was sold, 39% of the new company's employees were made redundant to leave just under 1000 employees, and many of the new senior BSkyB executive roles were given to Sky personnel. In April, the nine Sky/BSB channels were condensed into five, with EuroSport being dropped soon after the Sky Sports launch. Chisholm also renegotiated the merged company's expensive deals with the Hollywood studios, slashing the minimum guaranteed payments. The defunct Marcopolo I satellite was sold in December 1993 to Sweden's NSAB, and Marcopolo II went to Norway's Telenor in July 1992 after the Independent Television Commission was unable to find new companies to take over the BSB licences and compete with BSkyB. News International received 50%, Pearson PLC 17.5%, Chargeurs 17.5%, Granada 12%, and Reed International 2% of the new shares in the company.
By September 1991, after losses had been reduced to $30M a week, Rupert Murdoch said "there were strong financial marketing and political reason for making the compromise merger instead of letting BSB die. Many of the lessons had been learnt with more than half the running cost of the combined company". Further cuts in losses were a direct result of 313,000 new customers joining during the first half of 1991. By March 1992, BSkyB posted its first operating profits, of £100,000 per week, with £3.8 million weekly from subscriptions and £1 million from advertising, but continued to be burdened with £1.28 billion of debt. Stockbroker firm James Capel forecast BSkyB would still be indebted in 2000.
In the autumn of 1991, talks were held for the broadcast rights for Premier League for a five-year period, from the 1992 season. British television network ITV were the current rights holders for the Football League, and fought hard to gain the new rights. ITV had increased its offer from £18m to £34m per year to obtain the new rights. BSkyB joined forces with the BBC to make a counter bid. The BBC was given the highlights of most of the matches, while BSkyB paid £304m for the Premier League rights, giving them a monopoly of all live matches, up to 60 per year from the 1992–93 season. Murdoch has described sport as a "battering ram" for pay-television, providing a strong customer base. A few weeks after the deal, ITV went to the High court to get an injunction as it believed their details were leaked before the decision was taken. ITV also asked the Office of Fair Trading to also investigate since it believed Rupert Murdoch's media empire via the newspapers had influenced the deal. A few days later neither action took effect, ITV believed BSkyB was telephoned and informed of its £262m bid, and the Premier League advised BSkyB to increase its counter bid. BSkyB retained the rights paying £670m for the 1997–2001 deal, but was challenged by On Digital for the rights from 2001 to 2004, thus it was forced to pay £1.1 billion which gave it 66 live games a year. Following a lengthy legal battle with the European Commission, which deemed the exclusivity of the rights to be against the interests of competition and the consumer, BSkyB's monopoly came to an end from the 2007–08 season. In May 2006, the Irish broadcaster Setanta Sports was awarded two of the six Premiership packages that the English FA offered to broadcasters. Sky picked up the remaining four for £1.3bn.
Becoming a public limited company
In October 1994, BSkyB announced its plans to float the company on the UK and US stock exchanges, selling off 20% of the company. The stock flotation reduced Murdoch's holding to 40 per cent and raised £900m, which allowed the company to cut its debt in half. Sam Chisholm said "By any standards this is an excellent result, in every area of the company has performed strongly". Chisholm became one of the world's most highly paid television executives.In 1995, BSkyB opened its second customer management centre at Dunfermline, Scotland, in addition to its original centre at Livingston which opened in 1989. BSkyB entered the FTSE 100 index, operation profits increased to £155M a year, and Pearson sold off its 17.5% stake in the company.
Sam Chisholm resigned from BSkyB due to a rift with Rupert Murdoch in June 1997. A week later, Murdoch was quoted as saying "I cannot understand the fuss; BSkyB was grossly overpriced", which caused further rifts with the new management.
In 1997, BSkyB formed a partnership with Carlton and Granada to bid for the right for the new digital terrestrial network. In June, it was awarded the right to start the service, ONdigital, under the condition BSkyB withdrew from the group's bid. In February 2003 BSkyB wished to renegotiate its deal with MTV to reduce its payment from £20m. Chief executive Tony Ball said "We're definitely prepared to stare them down if we can't get a sensible deal. MTV, and other channels, have done particularly well out of the growth of Sky but the opportunity for savings is now there and Sky will be taking it," he added. "MTV has done extremely well out of that original deal." On 17 April 2003 BSkyB launched its own range of music channels Scuzz, Flaunt and The Amp, as part of its plan to create its own original channels for the platform. Within 18 months the channels failed to make impact, and were outsourced to the Chart Show Channels company.
Shortly afterwards it acquired Artsworld, giving a majority of subscribers full access to the channel. The buyout was part of James Murdoch's strategy to improve the perceptions BSkyB which could lead to potential new subscribers. John Cassy, the channel manager of Artsworld, said: "It is great news for the arts that a dedicated cultural channel will be available to millions of households."
In early 2007 Freeview overtook Sky Digital with nearly 200,000 more subscribers at the end of 2006, while cable broadcaster Virgin Media had three million customers. In July 2007, BSkyB announced the takeover of Amstrad for £125m, a 23.7% premium on its market capitalisation.
BSkyB and Virgin Media announced that they had reached agreement for the acquisition by BSkyB of Virgin Media Television. Virgin1 was also a part of the deal and was rebranded as Channel One on 3 September 2010, as the Virgin name was not licensed to Sky. The new carriage deals are understood to be for up to nine years. The deal was completed in July 2010 and Virgin Media Television was renamed Living TV Group.
In June 2010, News Corporation made a bid for complete ownership of BSkyB. However, following the News International phone hacking scandal, critics and politicians began to question the appropriateness of the proposed takeover. The resulting reaction forced News Corp. to withdraw its bid for the company in July 2011. The scandal forced the resignation of James Murdoch, who was the chairman of both BSkyB and News International, from his executive positions in the UK, with Nicholas Ferguson taking over as Chairman of BSkyB. In September 2012, Ofcom ruled that BSkyB was still fit to hold broadcast licenses in the UK, but criticised James Murdoch's handling of the scandal. On 28 June 2013, News Corporation was split into two publicly traded companies; the company's publishing operations and broadcasting operations in Australia were spun into a new company known as News Corp, while the company's broadcast media assets, including its 39.14% stake in Sky, were renamed 21st Century Fox.