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The effects of currency devaluation in Fox's purchase of Sky

21st Century Fox has made an offer to purchase the 61% of Sky that it does not already own for £11.7bn, more than two years after having sold its stake in both Sky Italia and Sky Deutschland to BSkyB. The deal, subject to regulatory approval in 2017, values the company at £18.5bn. When BSkyB bought Sky Italia and Sky Deutschland in November 2014, the three were collectively valued at approximately £21.5bn, and, as such, the present offer is considered to be at a discounted price.

This may be true, but Ampere’s analysis shows that of the 14% reduction, a large proportion can be attributed to the effects of the devaluation of GBP against the USD. Whilst Sky’s revenues grew by 14% in GBP terms since the acquisition of Sky Italia and Sky Deutschland, the recent devaluation means that in USD terms, its revenues have in fact fallen by approximately 11%. It is, therefore, unsurprising to see an offer that reflects this.

When purchased by Sky in 2014, Sky Deutschland was valued at £5.05bn – 24% of the overall £21.5bn value. When considering the revenue generated by each of the three, Sky Deutschland contributed approximately 13% of the total for the year ending 30 June 2016. This suggests that perhaps Sky Deutschland was sold at a premium, with the current offer recognising this.