The weekend news that Rupert Murdoch is seeking to unite his European Sky TV businesses of Sky Italia, Sky Deutschland and BSkyB under one single brand has been interpreted as his latest attempt to secure overall control of the UK business BSkyB. This move might be part of his longer term strategy to increase his 39% stake in BSkyB which ended in failure a couple of years ago after the phone hacking scandal poisoned the political well against him and his organisation. There were also regulatory concerns surrounding the deal and these are unlikely to have gone away now that he has changed tactics to look at merging his European businesses. Since then Mr Murdoch has separated his TV and newspaper assets into separate companies but that is unlikely to cut much ice with regulators who are likely to have the same concerns as they did a few years ago. Against this backdrop it is hard to understand the rationale for the deal given that the companies already enjoy fairly close synergies in any case so closer ties aren’t expected to much that much of a difference when it comes to bidding for future sports packages. Initial investor reaction would appear to indicate similar concerns, but BSkyB’s recent results may have generated some concern that the recent strong growth in subscribers may well be reaching critical mass as competition from BT Sport in the UK, Liberty Global, as well as internet video streaming services like Netflix and Apple have prompted concerns about future growth prospects There is certainly a case for arguing that the Pay-TV sector is becoming more and more competitive, but this deal could well be the wrong way in going about dealing with it, unless it’s being done for defensive purposes in order to make BSkyB that much more difficult to swallow up. It is becoming increasingly apparent that tablet devices are the latest high growth market, particularly with the advent and roll out of 4G services and mobile telecommunications provider Vodafone has given the markets a flavour of the directional of travel with respect to this, with its recent acquisitions. Vodafone also still has quite bit of cash burning a hole in its pocket, from its Verizon disposal despite the fact it has already bought German cable TV provider Kabel Deutschland and Spanish cable provider Ono. Given Vodafone already has Cable and Wireless’s fixed line assets it is not difficult to see where it sees its growth strategy over the next few years. Multichannel appears to be the way forward, with one provider offering mobile, broadband and TV it does appear that is where Vodafone sees its growth model. Vodafone already has a deal with BSkyB to stream content to devices on its new 4G network and this is likely to be where the we could see some significant growth over the next few years as tablets become cheaper and more readily available to the end user. We heard whispers at the beginning of this year of some talk that Vodafone might look at acquiring BSkyB and given Vodafone’s recent activity in Europe, this action by BSkyB could be a move to make them a little less appealing, though ultimately the final decision will be Murdochs. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person