BT and Sky shares slump on soccer deal
June 14, 2012
The City isn’t buying the good news on the English Premier League’s extraction of just over £3 billion (€3.73bn) for the new TV rights package from BSkyB and BT. Shares in both companies slumped as the market opened on Thursday.
BT revealed plans for a new sports channel that will take advantage of its fibre network to deliver “new interactive features” to BT Vision customers. The new channel will reportedly contain at first the 18 ‘first pick’ games that comprise part of what BT has bought for its £264 million a season. Ian Livingston, BT’s chief executive, said, “We are pleased to have won these rights and to have secured around half of the best games on offer each season. We look forward to offering football fans real value and great quality using the latest technology. BT is already investing £2.5 billion in fibre broadband. Securing Premier League rights fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider.”
“For the first time consumers have a real choice of provider when it comes to watching the best games,” said BT. “We have secured access to 38 live games, including the opening game of the season, which represents a quarter of the 154 matches to be shown each season.”
Retail pricing is not yet available, but the price of the three-year contract represents a 70 per cent increase. Shares in BSkyB were down 6.5 per cent and trading at their lowest point since April. Shares in BT were down 3.5 per cent. Analysts said BSkyB would be paying about £140 million a year more for the rights than the market had anticipated.
Sky will pay £760 million per year for three seasons starting in August 2013 for its five rights packages. It will show a total of 116 matches each season. Sky has been awarded live rights across all platforms, including satellite, cable, IPTV, online and mobile.
“In what was a very competitive tender process, we are pleased to have secured the combination of rights that we wanted, providing certainty for us and our customers. Whilst the cost is higher, we have capacity for this increase through the combination of excellent work on cost efficiency across the business and choices over other future spending. As a result, we remain confident of delivering our financial plans, in line with our expectations, unchanged, in each year of the new deal,” Jeremy Darroch, Sky’s Chief Executive, said.
BSkyB is paying a total of £2.28 billion for the rights to 116 games per season from 2013-14 to 2015-16, while BT is paying £736 million for the rights to 38 games per season over the three-year period.
Premier League chief executive Richard Scudamore expressed surprise at the level of the bids.
“It would be wrong of me to say it didn’t take me by surprise, yes, because the nature of this is a confidential process, it’s a sealed bid process and we only know what people are likely [to bid],” he said.