Will Rupert Murdoch Get Another Shot at BSkyB? – Businessweek
SkyB earnings contributed $498 million, or more than 18 percent, of News Corp.’s net income of $2.7 billion in the year ended June 2011. The company, with more than 10 million subscribers, has held exclusive rights to Britain’s top soccer games since 1992. The broadcaster’s subscription model makes it easier to generate secure and rising sales than newspapers, which rely on the volatile advertising market. And BSkyB has focused on selling additional products including broadband and telephone service, to squeeze more money from existing customers.
Owning BSkyB outright would generate as much as $800 million in free cash flow annually for News Corp. and could be used for acquisitions, says analyst David Joyce of institutional brokerage Miller Tabak. Strategically, BSkyB would give Murdoch a complete distribution system that would fit nicely with his other television assets, says Joyce. “The idea of having both content and distribution could be powerful,” he says. “It would help Murdoch roll out new content on those networks and get advertising for any new channels.”