BT chose sport over speed and service
April 30, 2021
So, BT Sport is for sale. Or is looking for strategic partners, etc, etc – all code for “up for sale”. No real surprise. Does it ever work when telcos, or other technology driven organisations, try and run TV companies? Not often.
Why did it get in to sport, or indeed TV of any kind? The pejorative explanation, which has had an outing in this column before, is that executives are seduced by the glamour of showbiz and want to be lauded in the director’s box of their favourite teams. Gavin Patterson, former CEO of BT, fitted this profile almost too perfectly.
Spending billions on TV sports rights was particularly irksome to two groups of people: Firstly those of us (pretty much everyone) who has ever tangled with BT customer services, a nerve-shredding experience that has seen BT lodged firmly at the foot of consumer appreciation tables. What tiny fraction of what they have spent on sport could have transformed their ‘that’s just too bad’ attitude to broadband complaints?
The second was the group who believed a first world broadband speed available near nationally, was really quite important to a developed nation that hoped to compete internationally. BT did not agree, openly asserting there was no demand for FTTH type speeds and ADSL and ADSL+ was just fine.
Essentially, it chose to supply an under-par broadband network but keep up demand and market share by providing attractive deals on the one content product it knew the market wouldn’t do without; football. Allied to its long running resistance to reforming Openreach, the tactic basically worked – despite slow speeds and poor service, BT still completely dominates the broadband market. If the amount spent on football is much less than the capex/opex needed to provide a 21st century service (probably is?), then, from a cynical shareholder point of view, I guess that counts as a very cunning plan.
Anyway, at last, times they are a-changing. The new regime at BT decided some time ago, under pressure from the government among others, that the UK did deserve a full fibre network after all, and it is even making reasonable progress in providing it. BT is also back in the cellular business, that it weirdly got out of years ago, and therefore, has much to do in 5G. And the sports market is now so complex and uncertain, only the cleverest specialists should stay in it.
Only because of the vast wealth of possible suitors, BT may even score a good price for its TV business. It will then face another dilemma: It should use the funds to fix its pension liability problem, but if it does that, it will immediately become vulnerable to takeover the first time the sterling exchange rate presents an opportunity to a raft of foreign buyers.