By Elvira Pollina and Amy-Jo Crowley

MILAN/LONDON (Reuters) -German media group ProSiebenSat.1 and European pay-TV operator Sky have revived talks over a mix of their companies in Germany, 4 sources conversant in the matter mentioned on Monday.

German broadcasters are struggling to reshape their enterprise to compete with on-line streaming gamers equivalent to Netflix (NASDAQ:) and DAZN. Beneath a possible transaction, Sky would pay tons of of million of euros to promote its operations in Germany to Prosiebensat.1, two of the sources mentioned.

Shares in Prosiebensat.1 closed 1.8% greater.

Comcast (NASDAQ:), which acquired Sky Deutschland as a part of a $40 billion buyout of European pay-TV broadcaster Sky in 2018, is working with advisory agency PJT Companions (NYSE:), sources have beforehand mentioned. Sky additionally operates in Italy and Britain. Prosiebensat.1 declined to remark. Sky declined to remark Comcast didn’t instantly reply to a request for remark.

If any deal goes forward, it might characterize a loss for Comcast, which purchased Sky Deutschland as a part of a $40 billion buyout of European pay-TV broadcaster Sky in 2018.

“For Comcast the problem is about sending a message of decisiveness to buyers,” mentioned François Godard, senior media and telecoms analyst at Enders Evaluation, including that Sky didn’t have sufficient scale to compete within the German market.

“ProSieben and their Joyn platform might be the answer,” he mentioned.

Sky Deutschland was price roughly 4.44 billion kilos ($5.60 billion) in 2014 when BSkyB took it over as a part of a deal involving Sky Italia. Sky Germany has suffered partly due to competitors from DAZN over soccer rights and a basic decline within the tv market.

Talks are at an early stage and there’s no certainty any deal will undergo, the sources mentioned. All requested to not be named as a result of the talks will not be public.

They added that no determination had been reached concerning the construction of any merger.

One of many sources mentioned Prosiebensat.1 might purchase just some components of Sky’s operations.

A possible mixture between Prosiebensat.1 and Sky in Germany had been explored final yr. At the moment, Prosiebensat.1 had not been occupied with pursuing a deal.

Since then, it has employed a brand new CEO and changed its chief monetary officer.

A mix with Sky in Germany might complicate any potential buyout strategy for Prosiebensat.1, one of many sources mentioned.

Czech funding group PPF has constructed a 13% stake in ProSiebensat.1 over current months, changing into its second-largest investor behind MFE-MediaforEurope, managed by the household of former Italian Prime Minister Silvio Berlusconi, which has a possible 29% stake, when together with derivatives.

($1 = 0.7923 kilos)