RPT-UPDATE 1-BSkyB mulls $4 bln bid for Spain's Digital Plus-FT

Fri Jul 4, 2008 6:07am EDT

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LONDON, July 4 (Reuters) - British pay-TV firm BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz) is considering a bid of more than 2.5 billion euros ($4 billion)for Spanish pay-TV platform Digital Plus, the Financial Times said on Friday.

The newspaper quoted people familiar with the situation as saying there had been no decision to proceed, but that BSkyB's strong cash flow could allow it to finance an acquisitions.

BSkyB declined to comment.

Analysts were sceptical that a bid would materialise, estimating that BSkyB is unlikely to take on the level of debt needed to complete the acquisition.

"Sky bidding for Digital Plus would be a negative. It doesn't have sufficient debt capacity to afford it," Credit Suisse analyst Simon Baker wrote in a research note.

BSkyB shares were 1.3 per cent higher at 452 pence by 0905 GMT, while shares in Spanish media group Prisa (PRS.MC: Quote, Profile, Research, Stock Buzz), Digital Plus' parent company, were up 2.13 per cent at 6.7 euros.

According to the Financial Times, Spanish groups Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz) and ONO, France's Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz) and French Telecom's (FTE.PA: Quote, Profile, Research, Stock Buzz) Orange unit were also likely to be interested in buying Digital Plusd. (Reporting by Myles Neligan and Mark Potter; Editing by Quentin Bryar)