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Microsoft Corp.

Microsoft and News Corp in Advanced Talks for $1 Billion Sky Global Investment

Strategic Insights

— 1 min read

Microsoft's Bill Gates and News Corp's Rupert Murdoch have been engaged in advanced talks about a potential $1 billion investment in Sky Global, the satellite broadcasting arm of News Corp. The proposed deal, which would value Sky Global at up to $35 billion, is seen as a way for Mr. Murdoch to reassure investors that the float of Sky Global can still go ahead despite the recent downturn in technology and media stocks. The talks are progressing, but no deal is imminent, and the discussions could still be called off.

Key Takeaways:

  • The proposed investment would give Microsoft a 3.5% stake in Sky Global, valuing the company at up to $35 billion.
  • The deal is seen as a major endorsement of Mr. Murdoch's plan to create a valuable holding company and acquisition vehicle using News Corp's worldwide network of satellite interests.
  • News Corp has approached several investors, including France's Vivendi, to raise cash for Sky Global prior to a flotation.
  • Microsoft has spent over $5 billion buying stakes in cable television groups in Britain, Europe, and the US.
  • News Corp has held talks with DirecTV and EchoStar Communications, the two top satellite broadcasters in the US, regarding a possible alliance.
  • Mr. Murdoch has also concluded a deal with US cable tycoon John Malone, whose Liberty Media has agreed to take a 4.8% stake in Sky Global.
  • Sky Global's principal assets include Star TV, an Asian satellite platform, as well as interests in Sky Latin America, Italy's Stream, News Broadcasting Japan, and listings company TV Guide.

Statistics:

  • The proposed investment would value Sky Global at up to $35 billion.
  • The current valuation of Sky Global is a sharp reduction from its earlier proposed valuation of near $50 billion.
  • Microsoft has spent over $5 billion buying stakes in cable television groups in Britain, Europe, and the US.
  • News Corp's US-listed stock was up $1 at $42 3/16 at midday in New York.
  • BSkyB's stock closed up 22p at 962p after a rally to 1,000p.

Sources:

  • "Bill Gates and Rupert Murdoch in $1bn Sky deal talks", uncredited, The Times, (no date)
  • "Rupert Murdoch on TV and film: 'Freedom comes with a price'", William Shaw and Amit Anand, The Times, January 1997
  • "News Corp shares rise 2% on DirecTV deal talks", Reuters, (no date)

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