Telecom BT has "beaten arch-rival Sky" to retain the rights to broadcast Champions League football matches until '21, agreeing to pay £1.2B ($1.47B) -- "nearly a third more than last time," according to Paul Sandle of REUTERS. BT said that it "won the exclusive rights" to show "live matches and highlights in Britain" starting in '18-19. BT has "taken on Sky in the sports rights market but an accounting scandal in Italy and a profit warning in its corporate business had raised questions about its ability to reshape itself as more of a growth-focused, content supplier." BT said that it had been "financially very disciplined" in the auction. BT Consumer Business CEO John Petter said, "We are paying more but we've got a lot more for it, 35 percent more broadcasting slots for example, and complete exclusivity instead of being shared with ITV." BT's new package includes "double-header" nights of two matches starting at 6pm and 8pm, "which it hopes will appeal to pubs and clubs." Commercial broadcaster ITV has a highlights program as "part of the current deal." Analysts at investment firm Jefferies noted that before it launched BT Sport in '13, BT was "losing around 200,000" customers per quarter. The "immediate impact of BT Sport was to reduce line loss by two thirds, and it has enabled BT to raise prices ahead of inflation since then." The analysts said, "Loss of rights would have undermined retention efforts and pricing power. But the speed of the announcement, less than a week after the tender deadline, suggests bidding action was muted, so shareholders may wonder how necessary it was to meet UEFA's expectation of a rise of at least 30 percent in full." BT has been "screening the competition" since '15 after it beat Sky with a deal that "signalled its willingness to go head-to-head with its rival in the sports broadcasting market." Petter said that BT "could fund the new deal through" more than £1B ($1.22B) of free cash generated by its consumer business, and "it would not have to change any of its financial forecasts." Audiences for football on pay-TV have "come under pressure this season," but Petter said that BT Sport was "bucking the trend by using social media like YouTube to reach fans." He said that BT Sport's audience was up by about 5% year-on-year and it was "continuing to grow." Petter "did not completely rule out doing a secondary deal" to provide highlights to a free-to-air broadcaster such as ITV, but said that "social media was a great way to reach viewers." Petter added that BT streamed the finals of the Champions League and the secondary Europa League on YouTube as well as showing them on its own channels last year, "achieving a combined audience of 12 million people." Shares in BT were trading up 0.2% at 334 pence on Monday, while Sky was down by the same percentage at 996 pence (REUTERS, 3/6).
SIGNIFICANT INCREASE: In London, Nic Fildes reported BT paid £394M ($482.2M) per season for the three-year deal. That is 32% higher than the £299M it paid in '13 to secure the exclusive rights. The rise was "higher than had been expected despite a huge increase in the value of domestic football rights" in the U.K. and Germany between the two auctions. The deal comes at a "tricky time" for BT, which is still in negotiations with U.K. communications regulator Ofcom "regarding an agreement over the future of its Openreach division." That "led to fears inside the company" that Sky, "emboldened" by the £18B ($22B) takeover offer from 21st Century Fox, would "strike to win back the rights to European football games that it unexpectedly lost" in '13. There were also "concerns" that UEFA was "unhappy with ratings" on BT's pay-TV sports channels although the company "dismissed that criticism" (FINANCIAL TIMES, 3/6). Also in London, Martyn Ziegler reported the exclusive deal will see ITV "lose the right even to show highlights, with BT Sport instead showing them for free over social media." Sky and ITV are both understood to have bid but were "unable to match BT Sport's offer" (LONDON TIMES, 3/6).
BT DEFENDS PRICE: In London, Mark Sweney reported BT denied customers are being forced to "foot the bill" for its deal after securing the contract "in the wake of inflation-busting price rises" for its broadband and phone services. The deal comes "on the heels" of the telecom "prompting outrage" among customers and consumer groups for introducing its third "price hike" in 18 months. In January, BT said that it was "to raise the cost of broadband and calls" and begin charging customers £3.50 ($4.28) per month for BT Sport, which will affect about 10 million customers from April 2, equating to increases of 5-6%. BT denied customers were "being squeezed" to fund its battle with Sky for premium sports rights. Petter said, "I don't think that is true. The broadband market is very competitive. Our share of the broadband market has been growing and customers vote with their feet [if they are unhappy]. The fact that the market is competitive means our offering has to represent good value for money. ... We were keen to keep a balance and be financially disciplined. ... This deal creates a lot of extra value for customers." Petter added that UEFA was "not pressuring BT to secure a free-to-air TV deal." Petter: "There is no requirement for us to do that at all. ... On the other hand, if there is a great deal to be done we will look at it. [But] there is no pressure at all" (GUARDIAN, 3/6).
'RATHER AFFORDABLE': BLOOMBERG's Rebecca Penty reported financial services company Raymond James analyst Stephane Beyazian said, "While we challenge the return on investment of the media strategy, the news is rather reassuring." Beyazian added that European games remain "rather affordable" versus English games at £1.7B ($2.1B) per year and the increased price BT is paying is not "significant," even if it means the company cannot meet "cost-cutting targets." Plans to show clips and weekly highlights on social media "may partly answer the pressure" from UEFA sponsors to increase the Champions League's visibility. Champions League sponsors, including Heineken, urged UEFA to "include a greater commitment to broadcasting free-to-air games" (BLOOMBERG, 3/6). In London, Sam Dean reported it was revealed last month Channel 4 was "exploring the prospect of buying one Champions League fixture per matchweek" under the deal. There "could now be talks between BT and Channel 4 over the possibility of BT subletting certain matches to the public service broadcaster" (TELEGRAPH, 3/6).
