BT is prepared to bid competitively against BSkyB in future [sports] rights auctions, says a report from investment bank Morgan Stanley. The comments emerged following a series of meetings by the bank with the UK’s leading telcos, states that “BT is very positive on the impact it believes BT Sport is having on BT’s customer retention and acquisition in broadband. Notably BT suggests its major source of historic churn has been customers lost to Sky, which has been very effective in targeting BT broadband customers. BT Sport is described as being ‘very helpful’ in defending this most vulnerable cohort of subscribers,” says the bank.
“BT estimates that around 1-1.5 million of its customers take a DTH Sky TV service and broadband from BT and that historically these would have been a natural target for Sky. BT estimates that about 1m of the subscribers to BT Sports watch on the satellite platform, implying that they take BT broadband and Sky DTH. Some of the 1 million will be paying for the channel, so will not take BT broadband. BT is clearly optimistic that this group is now less to churn as it values the BT Sports product,” the bank adds.
BT, says the bank’s report, “believes Sport is the key content type to attract consumers onto a platform – the ‘destination content is pay sport.’” Morgan Stanley warns that a wholesale sport deal with BSkyB is “seemingly not the plan”.
As to the upcoming auction of English Premier League (EPL) TV rights, the bank says: “We think that much of 2014 will be spent in the build up to the next auction of EPL rights for 2016/17 and beyond. BT would not be drawn on whether it would bid and bidding strategy. It did say that the purchase of the Champions League rights has given it greater optionality. Asked whether the EPL might sell the rights to a single entity next time, the BT view was that the EPL would be unwise to go down that route as it gains advantage from having more than one would-be buyer in the market. Our view on this is that BT (i) wants to keep an independent (not shared with Sky) BT Sports offering, (ii) will continue to bid competitively for sports rights, (iii) will be interested in the next set of EPL rights – albeit that its remarks about two players suggest it may be content with a portion rather than all the rights.