Germany’s RTL Group is to buy Sky Deutschland for €150m (£128m) as the Bertelsmann-owned company steps up its efforts to compete with global streaming rivals.
RTL, which also owns production/distribution giant Fremantle, will take over Sky’s operations in Germany, Austria and Switzerland, including programming and sports rights.
The deal brings together two of the biggest German streamers - RTL+ and Sky’s WOW - to create a player with 11.5 million paying subscribers. That puts it ahead of streaming rival Disney+ in Germany, but still behind Netflix and Prime Video.
The deal, which has been approved by the RTL board but remains subject to regulatory approvals, combines Sky’s sports rights – including Bundesliga, DFB-Pokal, Premier League and Formula 1 – with RTL’s entertainment and news brands across RTL+, free-to-air and pay TV.
Alongside the €150m upfront cost, an additional payment will be made if RTL’s share price exceeds €41 in the five years after the deal formally closes.
The final payment will be determined by the share price, with a cap of €70 per share, resulting in a maximum payment of €377m.
Sky Deutschland chief executive Barny Mills will continue to lead the business until the transaction is completed, with Stephan Schmitter remaining in place as chief executive of RTL Deutschland and then leading the combined company.
Thomas Rabe, chief executive at RTL Group, described the acquisition as “transformational” for his company.
“It will 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.
“It will boost our streaming business, with a total of around 11.5 million paying subscribers, further diversify our revenue streams and make us even more attractive for creative talent, rights holders and business partners.”
Synergies are estimated to be around €250m per year within three years after closing, he added, with the deal putting the company “in an even stronger position to invest in people, content and technology in Germany and in Europe to compete with the global tech and streaming players.”
Dana Strong, group chief exec at Sky, added: “Sky Deutschland has made significant progress over the past three years, delivering strong operational performance and reaching a record number of customers.
“The business is on track to achieve EBITDA break-even, reflecting the success of our turnaround plan. Combining the strength of our brand with RTL builds on that momentum and opens up even greater opportunities. This deal provides a strong platform for long-term success, and ensures Sky continues to share in the growth of the combined business.”
RTL will retain the use of the Sky brand in the region.
Sky Deutschland’s future had been in doubt in recent years, following Comcast’s acquisition of the European pay TV operator in 2018. The German operator has never made a profit but generated revenues of €2bn last year. It is also facing losing exclusive HBO content next year when Warner Bros Discovery launches its streamer HBOI Max in the country.
The deal is also not the first time Rabe has attempted to expand RTL’s broadcast operations, following an unsuccessful attempted merger with M6 in France last year.
RTL Deutschland will remain headquartered in Cologne and Sky Deutschland in Munich.
This article was first published by Screen’s sister title Broadcast.
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