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Sky buys set-top box maker
UK satellite pay TV operator Sky is to buy set-top box supplier Amstrad in a £125m cash deal. Sky said the offer price represented a 23.7 per cent premium on Amstrad's closing share price prior to announcement of the move. The buy has received approval of Amstrad's board of Directors. Sky said the deal would allow it to bring design and development of its set-top boxes in-house while sourcing hardware directly from electronics manufacturing companies. The deal is a plus for Amstrad and secures the company's future; it is currently reliant on Sky for 75 per cent of its revenues.
Our take...
Amstrad supplies 30 per cent of Sky's set-top boxes but indications are that Sky will now ramp that up rapidly to bring all design and development in-house and source all hardware directly from manufacturers. Sky has reduced its subscriber acquisition costs by £10 to £251 in the past 12 months and this strategy change will see that drop still further. Sky should make an immediate cost saving of around 20 per cent on hardware when fully integrated (Amstrad's margins in the second half of 2006 were just under 20%).
But this deal is about far more than cost savings alone. Sky has driven its recent subscriber acquisition strategy through technical innovation centred around the set-top box. The Sky Plus PVR is now in 28 per cent of Sky homes and growing rapidly. Sky has leveraged the technology to launch the Sky Anytime push on-demand service which saves movies and TV content to the box's disc for later viewing. A logical next step is to develop a hybrid set-top box with a broadband back-channel that would allow Sky to deliver true on-demand content using the network of its ISP Easynet and IPTV technology. High-definition set-tops are also an important thrust for the company and cost savings for Sky will be even greater by bringing supply of this high-end kit in-house. If its plans to launch a pay top-up service on the Freeview digital terrestrial platform go-ahead, it will also need to develop a range of DTT set-tops with integrated conditional access. These may use MPEG-4 compression which has yet to be widely adopted in the UK, although Sky has distanced itself from early suggestions that this was a definite plan for the service.
The other key factor that this deal enables is vertical integration within the Sky group and wider still for Sky's largest shareholder, News Corporation. Amstrad's only other major set-top client is News Corporation-owned Sky Italia and the potential now also exists to ramp up supply to this pay TV operation. News Corporation also owns NDS, the Israeli tech company that makes the conditional access and middleware technology that runs the set-tops for Sky and other News Corporation pay TV platforms around the world. As such, the new Sky-owned Amstrad will have a ready-made client base to grow its business. The deal is, of course, bad news for the other set-top box makers that currently supply Sky.
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Analyst, market intelligence & notices
Reports
Articles
(10) 1-10 showing
Free-to-air mobile TV market grows
More than 15m people in Asia subscribe to free-to-air mobile TV services
published:
01-Nov-07
territories:
Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea. Rep [S], Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, UK, USA - World
Ronan de Renesse
Broadcasting on the Internet
A listing of the online video sites operated by broadcasters or which are displaying broadcast content.
published:
15-May-07
territories:
Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Spain, Sweden, UK, USA - Europe, Nordic Region, North America
Tim Westcott
DTT take-up accelerates in Europe
Continent-wide penetration has reached 12 per cent, with UK and Finland leading the way and laggardly France and Spain now catching up
published:
15-May-07
territories:
Australia, Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Hungary, Italy, Japan, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland, UK, Greece, Ireland, Poland, Slovakia, Turkey - Europe
Tim Westcott
On-demand TV services in Europe
The rapid surge of IPTV is driving the growth in pay-per-view services
published:
19-Feb-07
territories:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, UK - Europe, Western Europe
Lingjie Wang
Mobile broadcast TV market
The business is still in its infancy as few countries have yet started services and uptake in Germany and the UK has been lower than expected, leaving Japan and especially South Korea to make the running.
published:
19-Feb-07
territories:
Germany, Italy, Japan, Korea. Rep [S], UK - Asia-Pacific, Western Europe
Ronan de Renesse
Rise of high definition TV channels
At the end of 2006 there were 106 high definition television channels worldwide. We forecast there will be 250 by 2010, 120 of them in Europe
published:
25-Jan-07
territories:
UK, USA, Australia, China, Germany, Italy, Korea. Rep [S], Poland, Sweden, France - Europe, Nordic Region, North America
Vincent Létang
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