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SBD Global/May 13, 2013/Media

British Telecom Company BT Adds Pay-TV Subscribers As Rivalry With BSkyB Heats Up

BT signed up 40,000 pay TV customers in the last three months, bringing the total to 810,000, the telecom group said "as it announced better than expected fourth-quarter and full-year results," according to Juliette Garside of the London GUARDIAN. BT's high-profile entry into broadcasting on Thursday, with the launch of two new sports channels, "was the opening salvo" in what consulting firm City expects "will be a pay TV price war." The telecom group "is using its newly acquired Premiership broadcasting rights to unpick the traditional pay TV model." BT will give its three sports channels away free to customers who buy its broadband. BT CEO Ian Livingston said, "In an environment where it is easier to focus only on the short term, we are investing in our future and delivering growth in profits and dividends" (GUARDIAN, 5/10). In L.A., Georg Szalai wrote analysts late Thursday and Friday "chimed in on how the broadband-sports offering from BT would affect BSkyB." UBS Analyst Polo Tang wrote, "We do not believe BSkyB subscribers will leave en-masse to take-up BT Sports. However, by bundling BT Sports in with BT broadband for free, we think BSkyB is likely to see a slowdown in terms of its broadband growth." Sanford C. Bernstein Analyst Claudio Aspesi said discussing the financial impact on BSkyB is "more nuanced." For every percent of BSkyB broadband customers that switch to BT, he estimates a loss of some $1.54M in operating profit. He called that "hardly meaningful in the context of a forecasted operating profit of $1.99B," this fiscal year (HOLLYWOOD REPORTER, 5/10).

BT SET FOR 'EPIC' BATTLE: In London, Owen Gibson wrote the high-profile unveiling of BT Sport this week, "marked by huge banners featuring footballer of the year and BT ambassador Gareth Bale looming over in the atrium of its City headquarters, coincided with encouraging results that lend a feelgood air to the once-moribund former monopoly provider." BT Retail CEO Gavin Patterson is convinced that the decision to, in the words of one analyst, "declare war in the UK triple-play market," will pay off. A key component "is the audacious entry into sports broadcasting with on-air talent including Jake Humphrey and Clare Balding, and new signings such as Rio Ferdinand." Patterson: "This opens up premium TV and sports programming to a group of people who would not have been able to afford it or didn't see it as good value. Whichever way you want to dress it up, you have to pay a minimum of £40 ($61) or £50 ($76) because you have to buy the basic Sky channels." Not only has a 10-year lease been signed on the new hi-tech studios currently being fitted out in a rapidly changing post-Games landscape at the Olympic Park, "but plans are afoot to add to a rights porfolio that also includes Premiership rugby, MotoGP and continental football." The stage "is set for an epic battle" between BSkyB and BT" (GUARDIAN, 5/10).

CHALLENGING SKY
: Also in London, Robin Scott-Elliot wrote BT's interest in the Premier League "came out of left field," but its successful bid, all £738M ($1.1B) of it, for 38 matches introduced the biggest threat to Sky's two decades of dominance. Both sides deny it, "but this is a broadcasting war and at its heart is a battle of the bands." The business of selling broadband provides the bottom line for BT, "and sporting inducement has become a key part in that." Sky, stressing its long-term commitment across sports, responded to BT's launch with a pointed statement: "For us, sport isn't a marketing gimmick to promote another product." But at Sky's west London base, "it is squeaky-bottom time, as someone once said, about what is developing at BT's new studios in the capital's east." BT, "with its deep pockets, will last longer than Setanta and ESPN, both seen off with a degree of comfort." This is, as one industry source put it, a "game changer" (INDEPENDENT, 5/10).
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