On Friday "two of Britain’s biggest companies will start the corporate equivalent of a gunfight," according to Henry Mance of the FINANCIAL TIMES. BT and Sky "will bid in an auction for Premier League football rights," which is expected to generate £3.5B-£5B ($5B-$7.6B) and underlines the huge value that live sports has for broadcasters and telecom groups worldwide. Winning the rights "is simple." Sky pays £760M ($1.1B) a year to broadcast 116 matches live in the U.K., "representing the lion’s share of the rights." BT, Discovery Communications and Al Jazeera -- all confirmed or possible bidders -- "could potentially pay more." But "winning with a strategy that makes long-term financial sense is harder." Irish broadcaster Setanta won rights in the '06 and '09 auctions, "but soon ran out of money." Former Setanta exec Richard Brooke said the auction process “is a wonderful mixture of analysis and fear." He added, "There are an awful lot of factors, some of which are purely scientific and some of which are not." BT "has fared better than Setanta: its share price has doubled since it won Premier League rights in 2012." Nonetheless, some analysts estimate that "the former telecoms monopoly is spending more on rights than it is gaining in additional sales." The rules of the auction "are not public." According to people familiar with the process, there "is no set number of rounds, but bidders are likely to be given a chance to make further offers." Bidders "are not told whether they are in the lead after the first round, or whom they are bidding against -- which can scare them into making higher pitches." Sky has to calculate how many of its estimated 4 million sports subscribers would go elsewhere "if the broadcaster lost Premier League rights." Analysts at Citi believe that "the answer is not many -- so long as Sky still shows the popular Sunday kick-offs." But a survey by Morgan Stanley found that one-third of Sky Sports subscribers "would switch to BT if the latter won the rights to games that kick off at 4pm on Sunday" (FT, 2/4).
