Discovery nears BT Sport JV, DAZN dropped
February 3, 2022
By Colin Mann
Although recent reports had suggested that streaming service DAZN was on the verge of clinching a deal to acquire BT Sport, Discovery has emerged as the frontrunner, with confirmation from BT that it has entered into exclusive discussions with Discovery regarding a new joint venture between BT Sport and Eurosport UK.
The telco also revealed an agreement in principle with Sky that CEO Philip Jansen says will provide its customers with more choice and more flexibility for the next decade.
BT said that following a detailed process to identify the best way to generate investment and strengthen its Sports business, it had entered exclusive discussions with Discovery on a deal to create a new sport and entertainment offering for customers in the UK.
The new business would be a 50/50 joint venture, bringing together BT Sport with Eurosport UK. The new combined business would remain committed to retaining BT Sport’s existing major sports broadcast rights while BT Sport customers would get access to Discovery’s sport and entertainment content, including the discovery+ app.
The proposed JV would bring together BT Sport and Eurosport UK, which have extensive portfolios of premium sport rights, including the Olympic Games, Premier League, UEFA Champions League, UEFA Europa League, cycling Grand Tours, tennis Grand Slams, the winter sport World Cup season and Premiership Rugby.
“We are excited about this opportunity with BT Group to offer consumers a stronger and simplified combined sport offering in the U.K. and Ireland, and, more broadly, to advance our strategy of bringing sports and entertainment to more consumers on the platform of their choice,” said JB Perrette, President & CEO of Discovery Streaming & International. “We are aligned with BT Group on a shared vision to maximise the value and appeal of our respective UK sport assets, and we look forward to concluding a deal in the coming weeks.”
Discovery entered the global sports media business in 2014 with its acquisition of Eurosport. Today, Discovery’s sports business – under the Discovery Sports banner – produces and distributes content to 130 million unique individuals a month across more than 200 markets and 20 languages outside the U.S. Discovery Sports’ consumer brands include Eurosport, Global Cycling Network (GCN), Global Mountain Bike Network (GMBN), Golf Digest and GOLFTV powered by PGA TOUR, as well as sports programming and content on discovery+ and Discovery’s free-to-air TV networks in Europe. The leading sports news and video site, Eurosport.com and its local country versions, engages audiences of more than 50 million sports fans per month.
BT Group is aiming to conclude the exclusive discussions with Discovery early Q1 for the new company to be operational later in 2022, subject to completion of the deal and approval by the relevant competition authorities.
“The proposed joint venture with Discovery, Inc. would create an exciting new sports broadcasting entity for the UK and would act as a perfect home for our BT Sport business,” said Marc Allera, CEO BT Consumer. “With a shared ambition for growth, as well as the combination of our world class sports assets along with Discovery’s premium sports and entertainment content, our customers will benefit from even more content in more places.”
“The announcement comes after months of speculation about the future of BT Sport,” notes Kester Mann, Director, Consumer and Connectivity, CCS Insight. “DAZN had long appeared the front-runner, making no secret of its desire to acquire Premier League football rights. However, as its talks with BT broke down, Discovery looks to have gate-crashed the deal.”
“BT’s move into sports broadcasting has always divided opinion amid the high spend needed to acquire football rights. As the operator ups its focus on networks and connectivity, particularly its growing ambition in full-fibre, an eventual sale of any joint venture with Discovery could be the likely end-game for the operator.”
“Initially, BT’s push into sport was successful in countering Sky’s bullish move into home broadband more than a decade ago. But it has failed to help turn around a continued decline in average spend and the unit was hit hard by the pandemic due to the closure of pubs and clubs.”
“Today’s announcement reflects an ongoing reshaping of the sports distribution model as streaming providers steadily become more influential. Only last year, AT&T agreed to spin off its media business and merge it with Discovery, while Amazon continues to push into sport broadcasting, notably though Premier League football rights and tennis,” he added.
Dan Risdale, MD of TMT at Edison Group, noted that more recently, a sale of BT Sport to DAZN (or Amazon, Disney or PE) had looked a more likely outcome. “The deal will come as a blow to DAZN, but it remains to be seen whether the combination of BT Sport and Eurosport UK will have a compelling enough suite of content to deliver strong returns,” he suggested.
According to Conrad Wiacek, Head of Sport Analysis at GlobalData, Discovery entering into a joint venture with BT Sport ahead of an eventual purchase will not only change the shape of sports broadcasting, it is a legitimate threat to Sky’s dominant market share position in UK and European sports broadcasting. “Discovery, which already owns the global media rights to the Olympic Games, is now likely to take control of one UK Premier League rights package, as well as exclusive rights to show the UEFA Champions League in the UK worth a combined $1 billion annually.”
“With Comcast now owning Sky and Discovery taking on BT Sport, the UK may become the first battle ground in the US giants’ plans to become the dominant European sports broadcaster. With Sky having an established presence in multiple European territories already, and BT Sport owning the Champions League rights in the UK until 2024, Discovery will be looking to maximise subscribers through its Discovery+ platform and Olympic coverage.”
“However, the big loser here is DAZN, which has been trying to establish a UK presence ahead of a possible IPO. Without BT’s subscriber numbers, the ‘Netflix of Sport’ now faces an uncertain future given the platform has been largely funded by billionaire Leo Blavatnik up to this point. Without a presence in one of the world’s largest sports rights markets, the viability of the entire platform may now be in question,” he concluded.
The announcement came as BT reported its Q3 figures. Jansen said: “BT has had a good quarter with encouraging market share performance, and we continued to make significant improvements in customer service, although revenue from our enterprise divisions was softer than we expected.”
“We had another record-breaking quarter on our full fibre build and a pleasing 37 per cent increase in FTTP connections following the launch of Openreach’s wholesale pricing offer. Our 5G build is also on track and now covers over 40 per cent of the UK population with independently verified network leadership.”
“Today sees two important strategic partnership announcements on how BT moves forward in the fast-evolving content and TV business. The agreement in principle with Sky will provide our customers more choice and more flexibility for the next decade. Separately, we are excited at the prospect of a new joint venture between BT Sport and Eurosport UK as we enter into exclusive discussions with Discovery,” he declared.
BT’s digital infrastructure provider Openreach now has 16 CPs signed up to Equinox, including Sky, TalkTalk and Vodafone, with 1.5 million end users connected to FTTP; and its 5G-ready customer base stands at 6.4 million and counting.