News Corp: Sky price ‘unrealistic’
May 5, 2011
By Chris Forrester
Chase Carey, News Corp’s COO, told analysts on its Q3 results conference call that BSkyB’s current price was “unrealistic” and “clearly troubling” and was simply too high for News Corp to consider.
“There seems to be an unrealistically rosy view of the challenges Sky must now navigate going forward,” he said, listing pressures from rival technologies, and the British economy.
News Corp, as yet unable to make a formal bid, is nevertheless talking about 700p as a fair price for the 61 per cent of BSkyB stock it does not already own. When it made its offer, back in May, Sky’s share price stood at 533p. It is now around 846p, having fallen back 3p in early trading on May 5th.
His stern words were echoed by CFO David Devoe, who said that News Corp was quite prepared to walk away from the deal and find something else to do with the $12 billion in cash the deal would cost.
The war of words is likely to get even noisier once the UK government gives its go ahead for the News Corp plan. However, there are plenty of analysts suggesting that – like it or not – News Corp is going to have to cough up nearer 800p for the Sky shares.