This would be part of a wider strategy to expand the reach of Vivendi’s own pay TV company, Canal+, according to three unnamed sources quoted in a Reuters report yesterday.
Sky’s current market value is around £18 billion, but could cost as much as £10 billion more, including debt, the sources suggested.
Should a deal go ahead, Canal+ would be part of the same group as the UK-based Sky, and its subsidiaries, Sky Italia and Sky Deutschland. Sky took over its smaller cousins last year and created Europe’s largest content operation.
It would also bring together two of media’s most powerful people: Rupert Murdoch, who effectively owns Sky through 21st Century Fox’s 39.1% stake, and Vincent Bollore, Vivendi chairman and main shareholder.
Reuters reported no formal approach has been made at this stage, but with Vivendi looking for lucrative content assets, Sky would be a likely target.
The report also stirred up interest in the markets, with Joshua Raymond, chief market strategist at the UK’s cityindex.co.uk saying this had triggered investors into buying Sky shares this morning. Sky’s share price went up following the news.
“Considering the handsome sums Sky has paid recently for majority broadcast rights of the Premier League and its move to large scale production television exclusive to the channel, its no surprise that Sky simply has to get a grip on its costs,” said Raymond. “In this sense, a merger between the two firms could well make sense.”
However, Raymond added it was unlikely Murdoch would look to sell his stake in Sky. “This could well be a ploy from Vivendi to sound out shareholder sentiment on the prospect of a deal with Sky or someone else,” he said.
Vivendi, Sky and 21st Century Fox hadn’t responded for requests for comment at press time.
The news comes as Vivendi’s move to buy on-demand site Dailymotion moved forwards and its row with activist shareholder P. Schoenfeld Asset Management.
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