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Last Friday saw a 10.5p (1.1 per cent) fall in BSkyB’s share price and continued the tumble over the past few weeks that has seen shareholder confidence ebb away. The recent falls, from £9.46 to £8.77 on anxieties over the likely price of the next auction round of English Premier League football costs, and last week’s news that BT Sport has won a 50 per cent slice of broadcasting rights for 4 years of new rugby coverage (European Rugby Champions Cup and the European Rugby Challenge Cup competitions).
BT and BSkyB will share the matches equally. Pool matches will be split 50/50, and both broadcasters will show two quarter finals, one semi-final and the final would be broadcast by both.
Analysts at bankers Espirito Santo, while describing the end result as being “pragmatic” added: “We continue to assume significant cost inflation for programming,” due to “uncertainty around bidding competition for football rights”. Meanwhile Barclays forecast a slowdown in Sky’s third-quarter revenues, adding: “We feel that the investment case is again hard to make.”
Morgan Stanley, in its note to clients, recognises that BSkyB’s own assessment of current trading conditions remains “challenging”, but the bank’s view is broadly in favour of Sky’s move to a broader portfolio of services. “Sky’s marketing in Q3 was focused on non traditional entertainment services such as box sets and theSky Store rather than on traditional TV subscription marketing. It was also a relatively light quarter for the marketing of broadband. This contrasted with a relatively heavy promotional quarter from BT (which for much of the period had a free DSL broadband for six months plus £100 supermarket voucher offer). There were also fibre promotions from BT and Virgin in the quarter,” stated the bank.
Morgan Stanley expects 70,000 new broadband additions for Q3, about 30,000 for DTH, around 105,000 extra HD subs, and an unchanged ARPU picture at some £571 (£567 same period last year).
BSkyB’s results are due on May 1st.