The English Premier League (EPL) bosses must be rubbing their hands with glee, as will the club owners themselves at the thought of receiving millions extra for the sale of TV rights over the UK.  Remember, there is a fundamental difference in the upcoming TV rights auction: a bidder can pitch for ALL the rights, not just various bundles of games.

The EPL rights cover the three years starting with the 2016/17 season, but the tender is expected to be decided around a year from now. BT Sport presently has two EPL packages in the less desirable Saturday lunchtime slot and has paid £246 million p.a.  BT Sport paid £299 million (Per annum) for the Champions League in November. The last EPL bundles of rights saw a 40 per cent uplift in costs when compared with the 2009 contracts.

Now, in a December 6th report for clients, investment banker Morgan Stanley says that BT could spend up to £1 billion per annum on extra EPL rights and still enjoy a “very acceptable” free cash flow from the investment. The bank’s rationale is that BT would need (a probably achievable) 1 million new broadband subscribers paying £10 a month for TV and £30 a month for a broadband+telephony bundle.

This move, suggests the bank, will bring BT “into sharp competition with Sky in its heartland and expose it to the risk of building a paying TV subscriber base to cover the cost. Yet these investments could pave the way for future group revenue growth at BT.”

But where does this leave BSkyB?  The bank’s report says Sky is in for a year of ‘double bind’, and a risky ‘no win’ situation.  “Sky risks another year of ‘double-bind’. To preserve its premium content position a successful bid for the EPL rights looks necessary, but consensus market forecasts of a 15-25 per cent increase (£114-190 million p.a.) in EPL costs for 2016/17 look scarcely enough. The extra packages on offer make this particularly the case. Failure to recapture a majority of the rights would be seen as threatening Sky’s premium content position and its perceived positioning in the pay TV market,” says the bank.

BT Sport was only launched in August 2013, but the changes in favour of BT have been impressive. The one month in BT’s third-quarter results saw – for the first time since 2011 – BT significantly overtake Sky in net subscriber additions. “If these early positive metrics are sustained for the next 12 months, we think this would make BT more confident in bidding for future rights auctions,” says Morgan Stanley.

Other posts by Chris Forrester:

1. Rivada visits Terran Orbital’s manufacturing HQ
2. Avanti wins spectrum debt obligation case
3. SpaceX breaks records for re-use launchers
4. IRIS2 already in trouble?
5. Intelsat contemplates next steps
6. SpaceX: 2.7m customers and $180bn value
7. Boeing, Virgin Galactic in court battle
8. Jupiter-3 a changemaker
9. Terran Orbital is again Compliant

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