Sky retreats from Germany after losing billions

Telegraph

5 hours ago

Sky has struck a cut-price deal to sell its German television business after losing billions of pounds on a troubled expansion spree.
The media giant announced the sale of Sky Deutschland to Radio Télévision Luxembourg (RTL), Germany's biggest broadcaster, on Friday, in a deal that values the business at €150m (£128m).
Comcast had been exploring the sale of Sky Deutschland for several years, which was bought from Rupert Murdoch's Fox for £2.9bn in 2014 but has never turned a profit.
Cost-cutting
The sale forms part of attempts by Sky-owner Comcast to radically scale back the British broadcaster, which is struggling amid increased competition from streamers.
Comcast already slashed the value of Sky by $8.6bn (£6.3bn) in 2022 after acquiring the business for $31bn in 2018.
Last year, it also reported a £1.2bn write-down on loans to its German and Italian operations, which were bought by Sky in a £7bn deal in 2014.
Struggles in Europe have prompted further cost-cutting efforts at Sky, which recorded a pre-tax loss of £773m in 2023, according to its latest accounts.
Plans to cut 2,000 customer service roles were announced in March.
Meanwhile, RTL, which is part of media conglomerate Bertelsmann, could pay a further €377m (£321m) for Sky Deutschland based on its future performance.
For example, extra payments will be triggered if RTL's share price exceeds €41.
The combined business will have 11.5m customers.
Thomas Rabe, the chief executive of RTL, said the deal would 'bring together two of the most powerful entertainment and sports brands in Europe and create a unique video proposition across free TV, pay-TV and streaming'.
'Germany has always been different'
The German division, which operates in Germany, Austria, Switzerland and parts of Italy, holds the rights to broadcast the Bundesliga (the German football league) until 2029.
Francois Godard, an analyst at Enders Analysis, said Sky had struggled in Germany with market share languishing around 10pc.
He said earlier valuations of Sky Deutschland had been based on 'magic growth … of course that did not happen'.
'Germany has always been different from the UK. They never reached the kind of penetration they had in the UK.'
Meanwhile, Sky's attempted overhaul was dealt a blow last year after bosses discovered an embarrassing advertising blunder. This stemmed from Sky uncovering miscalculations in its ad sales that meant its partners did not receive the correct revenues from their deals dating back years.
Like other broadcasters, Sky has also been navigating a shift from linear TV to streaming, as customers switch from expensive satellite TV packages to on-demand streaming apps.
Next year, it will face further competition as HBO launches its Max streaming service.
In December, Sky secured a deal to keep HBO's shows, such as a new Harry Potter series, bundled with its service, but they will no longer be exclusive to the UK broadcaster.