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SBD Global/June 14, 2012/Media

Premier League Lands $4.7B TV Rights Bonanza From Sky and BT

Manchester City's Premier League title win over ManU helped boost TV rights bidding.
BSkyB has retained the live broadcast TV rights for the Premier League in a £3B ($4.7B) deal, according to Owen Gibson of the London GUARDIAN, who adds that the landscape of British broadcasting "shifted dramatically" after telecom company BT "bought a large slice" of the rights, boosting the TV deal to a "record" 71% increase. An "exciting climax to the season," combined with "intense competition" between rival broadcasters fueled the increase in the three-year deal. BSkyB retained the majority of the rights, securing 116 matches a season. But BT sprung a surprise by winning the rights to 38 live matches per season, including almost half of the "first pick" games. The deal ends ESPN's association with Premier League football. BSkyB has built its pay-TV business over 20 years "on the back of live top flight football." The Premier League has increased its U.K. live TV rights income to £3B -- a £1.2B ($1.9B) boost on the current deal. EPL CEO Richard Scudamore said BT's securing 18 of the 38 coveted "first pick" matches would be a "game changer." Scudamore: "[BT chief executive] Ian Livingstone and his colleagues have hugely ambitious plans. They have not invested in all this fibre [optic cable] for nothing, they want to establish a direct relationship with consumers." He asked that the clubs not use the new deal "to rack up losses and fuel wage inflation." While "he said he wanted clubs to still invest in the best talent, he also made a plea to invest in infrastructure and youth development." Scudamore: "We are entering a new era with financial fair play [the new Europe-wide regulations of club spending]. I'm hoping it will get invested in things other than playing talent. It should also be able to achieve sustainability" (GUARDIAN, 6/13).

HOW IT HAPPENED: The MANCHESTER EVENING NEWS reported that the Premier League "credited the thrilling last-gasp" title victory by Manchester City over ManU for helping to boost the price by £1.254B (MANCHESTER EVENING NEWS, 6/13). The LONDON TIMES' Philippe Naughton reported that the deal "will give a huge economic boost" to Premier League clubs. BT, meanwhile, will "set up its own dedicated channel to run on multiple platforms." Premier League CEO Richard Scudamore said, BT would “deliver new ways in which fans will be able to follow the competition” (LONDON TIMES, 6/13). THE HOLLYWOOD REPORTER noted that al-Jazeera "joined the incumbents" in the battle after the auction went into a second round (THE HOLLYWOOD REPORTER, 6/13). Meanwhile, ESPN released a statement that read, "We made a strong bid that reflected the value of the rights to our business, and we thank the Premier League for the chance to participate. We're looking forward to continuing our Premier League coverage next season, and continuing to serve fans with great live sports events and programming including the FA Cup, Europa League, Scottish Premier League, Serie A, Premiership Rugby, Top 14, golf, darts, UFC, NBA and much more" (ESPN).

IN THE GAME: BLOOMBERG's Jonathan Browning reported that BT will pay a £22M ($34.2M) deposit this month followed by six installments of £120M. It "kept its outlook" for '12-'13, and said earnings before interest, taxes, depreciation, and amortization will be cut by about £100M ($155.6M) and free cash flow by £200M ($311.1M) in '13-'14. BT CEO Ian Livingston said, “BT is already investing £2.5B ($3.9B) in fiber broadband. Securing Premier League rights fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider” (BLOOMBERG, 6/13).

PAYING WHAT IT TAKES TO KEEP ESPN OUT? In London, Dan Sabbagh wrote, "Those who believe that the cost of buying the rights to broadcast Premier League games has reached bubble territory are missing the point. The market price for the matches is no longer in line with the commercial value of the games, but instead in line with the value of keeping other cash rich broadcasters like the Disney-backed ESPN out. ... Football may not have needed BT, but it has turned out that phone giant needed football. Its arrival has hiked up the prices for a league that until Wednesday nobody thought could get richer" (GUARDIAN, 6/13).
 
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