Murdoch's mega bid not big enough, says BSkyB TV
Rupert Murdoch's News Corp. revealed a bid of 7.8 billion pounds for full control of British pay-TV giant BSkyB on Tuesday, but the television giant which screens Premier League football demanded more.
BSkyB replied that the informal cash offer of 700 pence per share for the 61-percent not yet owned by News Corp., and valuing the entire group at about 12 billion pounds, was too low.
A formal bid only "in excess of 800 pence per share" -- or 14 percent higher than the current bid, might be worthy of consideration, it said.
The market will wait to see whether News Corp. will meet the roughly 8.9 billion pounds (13.1 billion dollars, 10.7 billion euros) being demanded by BSkyB for the outstanding shares, as both companies said talks would continue.
News Corp. -- which controls such top media outlets as Fox television and The Wall Street Journal -- currently has 39.1 percent of BSkyB.
The price of shares in BSkyB rocketed by more than 20 percent in trading here.
The deal negotiations have meanwhile excluded Murdoch's son James owing to a conflict of interest. James Murdoch is both a senior executive at News Corp. and chairman of BSkyB.
News Corp. said in a statement published on Tuesday that it and BSkyB's "independent directors have been unable to reach a mutually agreeable price at the current time".
"However, both parties have agreed to work together to proceed with the regulatory process in order to facilitate a proposed transaction," it added.
The US group's chief operating officer Chase Carey said the offer proposed by News Corp. represented a premium of 27.5 percent over BSkyB's average share price for the past year.
"We believe that this is the right time for BSkyB to become a wholly-owned part of News Corporation with its greater scale and broader geographic reach," he said.
"For News Corporation, our proposal presents an opportunity to consolidate a core business with which we have been closely associated for over two decades. "News Corporation will also benefit from increasing the geographic diversification of our earnings base, reducing our exposure to cyclical advertising revenues and increasing our direct consumer subscription revenues," Carey added.
The bid for all of BSkyB comes after the British group recently posted soaring quarterly profits and data showing it was fast closing in on securing its target of 10 million paying customers in Britain.
BSkyB, in which Murdoch's News Corp. is the biggest single shareholder, also sells telephone and Internet services.
It also broadcasts major sporting events and its 24-hour channel Sky News, in High Definition -- which offers better picture quality.
In addition, this year it has begun to screen some live football matches in 3D.
News Corp. meanwhile announced on Monday that it had bought an electronic reading platform developed by Hearst and invested in a company which seeks to help news organizations make money on the Web.
The acquisition of e-reader platform Skiff from US newspaper and magazine publisher Hearst Corp. and the investment in Journalism Online are the latest moves in Murdoch's campaign to get readers to pay for content online.
© 2010 AFP