BSkyB makes its move into broadband
Satellite broadcaster BSkyB is getting ready to make its play against cable rivals by acquiring high-speed internet provider Easynet this week for around £150m.
The purchase will allow the broadcaster to offer what observers call the “triple play” of services into the home: broadband, video-ondemand and telephony, setting it in direct competition against rivals such as BT and NTL, which last month said it would buy Telewest for $6bn (£3.4bn).
The market for these bundled services is expected to top 8m by the end of the year.
Last week Sky, which is 37 per cent owned by Rupert Murdoch’s News Corp, said it planned to raise around £1bn through a bond placing. It said some of the proceeds would be used for acquisitions.
The move into broadband internet is seen as the boldest move by Murdoch’s son James, since he became Sky chief executive in November 2003. James Murdoch and his senior team are understood to have been in talks with a number of internet providers over several months.
Easynet was an attractive option for Sky because of its investment in local loop unbundling. This is the process of putting its own equipment into BT telephone exchanges to provide higher speed connections and a wider range of services.
Easynet has its own equipment in 250 local exchanges and says it plans to invest in a further 100.
Easynet chief executive David Rowe stands to gain £4m for his shares in the company once the sale is completed.
The purchase will give Sky access to 2m customers who cannot pick up its satellite link.
