Sky plc



Sky plc   is a British satellite broadcasting, on-demand internet streaming media, broadband and telephone services company with headquarters in London. It has operations in the United Kingdom, Ireland, Germany, Austria and Italy. Sky is Europe's biggest and leading media company and largest pay-TV broadcaster, with 21 million subscribers and 30,000 employees as of 2015.

Initially formed in 1990 by the equal merger of Sky Television and British Satellite Broadcasting, BSkyB became the UK's largest digital subscription television company. In 2014, after completing the acquisition of Sky Italia and Sky Deutschland, the merged company changed its name to Sky plc. Sky is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £18.75 billion (€26.76 billion) as of 2015. Rupert Murdoch's 21st Century Fox owns a 39.14 per cent controlling stake in the company.

Foundation
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 both suffering financial losses as both competed against each other for viewers. The Guardian later characterised the merger as 'effectively a takeover by News Corporation'.

The merger was investigated by 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 about the merger, 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 were sold off, 39% of the new company's employees were made redundant to leave just under 1000 employees, many of the new senior BSkyB executive roles were given to Sky personnel with many BSB leaving the company. In April the nine Sky/BSB channels had been 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 off in December 1993 to Sweden's NSAB, and Marcopolo II went to Norway's Telenor in July 1992 after the ITC 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%, Reed International 2% of the new shares in the company.

By September 1991, the weekly losses had been reduced to £1.5M a week, Rupert Murdoch said "there were strong financial marketing and political reason[s] 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. James Capel forecast BSkyB would still be indebted in 2000.

Premiership football
In the autumn of 1991, talks were held for the broadcast rights for Premier League for a five-year period, from the 1992 season. ITV were the current rights holders, and fought hard to retain the new rights. ITV had increased its offer from £18m to £34m per year to keep control of the 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 paying £304m for the Premier League rights, would give them a monopoly of all live matches, up to 60 per year from the 1992 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 influence the deal. A few days later neither action took effect, ITV believed BSkyB was telephoned and informed of its £262m bid, and Premier League advised BSkyB to increase its counter bid.

BSkyB retained the rights paying £670m 1997–2001 deal, but was challenged by On Digital for the rights from 2001–2004, thus were forced to £1.1 billion which give them 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.

Flotation
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 percent 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. 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.

Launch of Sky Digital
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. A few days afterwards BSkyB left the consortium, and work fully concentrated on its digital satellite network.

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 and Flaunt with The Vault being added in Summer 2003, 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 art world, 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.

Amstrad takeover
In July 2007, BSkyB announced the takeover of Amstrad for £125m, a 23.7% premium on its market capitalisation. BSkyB had been a major Amstrad client, accounting for 75% of sales for its 'set top box' business. Having supplied BSkyB with hardware since its inception in 1988, market analysts had noted the two companies becoming increasingly close in recent years.

Virgin Media Television acquisition
On 4 June 2010, 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.

On 29 June 2010, The Competition Authority in Ireland cleared the proposed transaction.

On 20 July 2010, The Office of Fair Trading announced that they would review BSkyB's acquisition of the Virgin Media Television business to judge whether it posed any competition concerns in the UK. The OFT planned to investigate the deal to see whether it could constitute a qualifying merger under the Enterprise Act 2002. The watchdog invited interested parties from the industry to comment on the sale, including its potential impact on the pay-TV market. On 14 September 2010, the OFT decided not to refer BSkyB's takeover of Virgin Media's TV channels to the Competition Commission.

Attempted takeover by News Corporation
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, United Kingdom broadcasting regulator Ofcom ruled that BSkyB could stay on air — and it criticised former chairman Murdoch's handling of the News International phone hacking scandal. ‘As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously,’ BSkyB replied in a media release.

Following News Corporation's split into two on 28 June 2013 to create two separate companies, 21st Century Fox (the re-branded News Corporation), and the spin-off company New News Corp, the 39.14% stake held by News Corporation in BSkyB was retained by the re-branded 21st Century Fox.

European acquisitions
On 12 May 2014, BSkyB confirmed that it was in talks with its largest shareholder, 21st Century Fox, about acquiring 21st Century Fox's 57.4% stake in Sky Deutschland and its 100% stake in Sky Italia. The enlarged company (dubbed "Sky Europe" in the media) will consolidate 21st Century Fox's European digital TV assets into one company. The £4.9 billion takeover deal was formally announced on 25 July, where BSkyB would acquire 21st Century Fox's stakes in Sky Deutschland and Sky Italia. BSkyB also made a required takeover offer to Sky Deutschland's minority shareholders, resulting in BSkyB acquiring 89.71% of Sky Deutschland's share capital. The acquisitions were completed on 13 November. British Sky Broadcasting Group plc changed its name to Sky plc to reflect the European acquisitions, and the United Kingdom operations were renamed to Sky UK Limited. Sky plc bought out the remaining minority shareholders in Sky Deutschland during 2015, using a squeeze-out procedure to obtain the remaining shares and delist Sky Deutschland on 15 September 2015.

Proposed takeover by 21st Century Fox
On 9 December 2016, 21st Century Fox announced that it had made an offer to acquire the remainder of Sky plc for £11.7 billion at a value of £10.75 per-share. It marks Fox's second attempt to take over Sky, as its previous attempt under News Corporation was affected by the News International scandal. The two companies reached an agreement on the deal on 15 December; it is subject to regulatory approval.

Management
The first CEO of BSkyB was Sam Chisholm, who was CEO of Sky TV before the merger. Chisholm served in this position until 1997. He was followed by Mark Booth who was credited with leading the company through the introduction of Sky. Tony Ball was appointed in 1999 and completed the company's analogue to digital conversion. He is also credited with returning the company to profit and bringing subscriber numbers to new heights. In 2003, Ball announced his resignation and James Murdoch, son of Rupert Murdoch was announced as his successor. This appointment caused allegations of nepotism from shareholders.

On 7 December 2007, it was announced that Rupert Murdoch would be stepping down as BSkyB's non-executive chairman and would be replaced by his son, James. In turn, James stepped down as CEO of BSkyB, to be replaced by Jeremy Darroch.

The current 13 company directors include James Murdoch (Chairman), Nicholas Ferguson (Chief Executive), David Darroch (Chief Executive Officer), Andrew Griffith (Chief Executive Officer), Martin Gilbert (Chief Executive Officer), Matthieu Pigasse (Managing Director), Tracy Clarke (Bank Executive), David Lewis (Chief Executive Officer), Andrew Sukawaty (Manager), Adine Axen (Director), John Nallen (Company Director) and Charles Carey (Chief Executive Officer and President).

Financial performance
Financial results have been as follows:

Stake in ITV
ITV plc has been the subject of a flurry of rumoured take-over and merger bids since it was formed. For example, on 9 November 2006, NTL announced that it had approached ITV plc about a proposed merger. The merger was effectively blocked by BSkyB on 17 November 2006 when it controversially bought a 17.9% stake in ITV plc for £940 million, a move that attracted anger from NTL shareholder Richard Branson and an investigation from media and telecoms regulator Ofcom. On 6 December 2006, NTL announced that it had complained to the Office of Fair Trading about BSkyB's move. NTL stated that it had withdrawn its attempt to buy ITV plc, citing that it did not believe that there was any possibility to make a deal on favourable terms. On 17 July 2014, BSkyB's 6.4% stake in ITV was sold to Liberty Global, valued at £481 million.