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SBD Global/September 14, 2012/Media

BT Rises As Rugby Rights Promote Broadband Demand

The Heineken Cup could be threatened by BT's new TV rights deal.
BT Vision, which signed a deal to broadcast Premiership rugby this week, saw its stock surge "to the highest price in four years" after int'l financial group Credit Suisse said that BT will benefit from "accelerating broadband demand," according to Jonathan Browning of BLOOMBERG. BT is adding sports rights to "expand its TV business and sell more broadband connections." The company accelerated its fiber broadband service by one year to fend off faster Internet offers from competitors such as Virgin Media and Sky Broadcasting. BT will pay £152M ($245M) to show major English Rugby matches, taking away the broadcasting rights from BSkyB and ESPN. BT CEO Marc Watson said, "BT is serious about sport and this deal means we will be offering the very best rugby action alongside some of the most thrilling football matches from the Premier League” (BLOOMBERG, 9/12).

HEINEKEN CUP THREAT: In London, Chris Hewett reported that the immediate reaction to BT's announcement was "focused less on what the influx of money might buy than on what it might cost." The future of the "wildly popular but commercially underpowered" Heineken Cup was "under serious threat even before the Premiership fraternity struck gold." Now, it is "difficult to imagine how it will survive in its present form." Officials at European Rugby Cup, which runs the Heineken and second-tier Amlin Challenge Cups, were "framing their fierce response." Meanwhile, the "talk in the corridors of Premiership power was of an unexpectedly lucrative deal" that will lead domestic league rugby into a more secure, short-term financial future (INDEPENDENT, 9/13). Also in London, Josh Halliday reported that the conflict over Europe's premier club rugby union competition "marks a significant escalation in BT's challenge to Sky's 20-year dominance of U.K. pay-TV sports rights." Both companies claimed exclusive U.K. TV rights to show flagship European games featuring English Aviva Premiership clubs beginning in '14. BSkyB announced it had "secured an extension" of its exclusive live-TV rights to the Heineken and Amlin Challenge Cups. The rival deals "exposed a rift at the heart of professional club rugby in Europe." The row centers on which body -- European Rugby Club or Premiership Rugby -- "has the mandate to sell live TV U.K. rights for European competition games" (GUARDIAN, 9/13). Also in London, Matt Scott wrote that just after BT and Premiership Rugby announced their media rights deal Wednesday, "Sky reacted decisively, extending its deal for the Heineken Cup with or without the English for another four years." The "swiftness of the satellite broadcaster’s response tells us all we need to know about the threat it faces with BT’s presence in a marketplace it has made its own over the past 20 years" (TELEGRAPH, 9/12).

LIVE SPORT CASHES IN: In London, Roger Blitz reported that the "clamour for sport’s live broadcast rights is increasing." Following a 70% rise in the value of the Premier League’s football rights in June, Premiership Rugby has "followed with its own substantial uplift." It did not "even have to launch a formal tender." Live sport is "attracting bigger TV audiences, and increasing advertising revenues" as a result. This is "enriching sports teams and players." In the case of England rugby, the revenue will "provide much-needed financial stability to clubs, and the chance to increase stadium capacity or build new venues" (FINANCIAL TIMES, 9/12).

ON THE ROCKS: In London, Mark Souster opines, "Has Mark McCafferty got a death wish? Has the chief executive of Premier Rugby (PRL) lost the plot entirely? It would seem so judging by his decision to adopt the nuclear option in his “negotiations” with ERC over the future of the Heineken Cup. If the owners or chairmen of the 12 Aviva Premiership clubs do not put him out of his misery, he threatens to drag them on to the rocks. At a stroke, he has alienated the entire world of rugby and that takes some doing" (LONDON TIMES, 9/14).
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