![The logo of the German media company ProSiebenSat.1 adorns the head office in Unterfoehring](https://cloudfront-us-east-2.images.arcpublishing.com/reuters/EBXT7SCBMFN6PMQDX2IJ7U2GJQ.jpg)
[1/2] The logo of German media company ProSiebenSat.1 is seen in front of its headquarters in Unterfoehring near Munich, Germany, November 5, 2020. REUTERS/Andreas Gebert//File Photo
May 22 (Reuters) – German media group ProSiebenSat.1 (PSMGn.DE) and European pay TV operator Sky have rekindled talks about combining their companies in Germany, four sources familiar with the matter said Monday.
German broadcasters are struggling to reshape their business to compete with online streaming players such as Netflix (NFLX.O) and DAZN.
Under a potential transaction, Sky would pay hundreds of millions of euros to sell its operations in Germany to Prosiebensat.1, two of the sources said.
The Prosiebensat.1 share closed 1.8% higher.
Comcast (CMCSA.O), which acquired Sky Deutschland in 2018 as part of a $40 billion buyout of European pay TV channel Sky, is working with consulting firm PJT Partners, sources have previously said. Sky also operates in Italy and Great Britain.
Prosiebensat.1 declined to comment. Sky declined to comment. Comcast did not immediately respond to a request for comment.
If a deal goes through, it could mean a loss for Comcast, which bought Sky Deutschland as part of a $40 billion buyout of European pay TV channel Sky in 2018.
“For Comcast, it’s about sending a message of decisiveness to investors,” said François Godard, senior media and telecoms analyst at Enders Analysis, adding that Sky didn’t have enough scale to compete in the German market.
“ProSieben and their Joyn platform could be the solution,” he said.
Sky Deutschland was worth about £4.44 billion ($5.60 billion) in 2014 when BSkyB acquired it as part of a deal with Sky Italia. Sky Germany has suffered in part from competition from DAZN for football rights and a general decline in the television market.
Talks are at an early stage and a deal is not certain to go through, the sources said. All asked not to be named because the conversations are not public.
They added that no decision had yet been made on the structure of a merger.
One of the sources said that Prosiebensat.1 was only able to buy some parts of Sky’s operations.
Last year, a possible combination between Prosiebensat.1 and Sky was investigated in Germany. At that time, Prosiebensat.1 was not interested in pursuing a deal.
It has since hired a new CEO and replaced its chief financial officer.
A combination with Sky in Germany could complicate any potential takeover approach for Prosiebensat.1, one of the sources said.
Czech investment group PPF has built up a 13% stake in ProSiebensat.1 in recent months, becoming the second-largest investor behind MFE-MediaforEurope (MFEB.MI), controlled by the family of former Italian Prime Minister Silvio Berlusconi, which has a potential 29% stake, including derivatives.
($1 = 0.7923 pounds)
Reporting by Elvira Pollina, Alex Huebner and Amy-Jo Crowley; Edited by Matt Scuffham