Sky Deutschland, which serves audiences in Germany, Austria, Switzerland, is to be sold to the RTL Group.
The combined business will create a subscriber base of around 11.5 million have a content offering spanning premium live sports, entertainment and news across RTL+, Sky, the WOW streaming service and RTL’s free-to-air channels.
RTL will pay €150 million in cash and Comcast, Sky’s parent company, will also benefit from a variable consideration linked to RTL Group’s share price performance worth up to €377 million.
The deal, which has been approved by the Board of Directors of RTL Group, is subject to regulatory approvals.
RTL will acquire the WOW brand as part of the transaction and, under a separate trademark license agreement, will have the right to use the Sky brand in Germany, Austria, Switzerland, Luxembourg, Liechtenstein and South Tyrol.
Thomas Rabe, CEO of RTL Group, said: “The combination of RTL and Sky is transformational for RTL Group. 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.
“The synergies are estimated to be around €250 million per annum within three years after closing, creating significant shareholder value.
“Together, RTL and Sky will be 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.
“I want to recognise the outstanding work of the Sky Deutschland team, whose strong performance over recent years has laid the foundation for this next phase.”
Dana Strong, Group CEO at Sky, said: “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.”