LONDON — Fears that satellite broadcaster BSkyB and telecoms company BT Group Plc overpaid for their £3 billion ($4.7 billion) rights to live English Premier League soccer matches drove their shares lower yesterday.
The three-year deal, which cements the Premier League’s position as the most valuable domestic soccer competition in the world, is a 70 per cent rise on the current UK agreement which expires at the end of next season.
The increase underscores the value of live sporting action to media and telecoms companies, who are being drawn into closer competition by converging technologies.
BSkyB, part-owned by Rupert Murdoch’s News Corp, will pay £760 million per season to show 116 live games — a 40 per cent increase on the cost of its current deal.
Live soccer has been a mainstay of BSkyB’s programming since the Premier League was launched two decades ago.
However, concerns over competition from new market entrant BT and the price overshadowed relief over retaining the bulk of the rights, sending BSkyB shares more than seven per cent lower.
“The cost is higher than expected, and BT arguably looks a more potent competitor than ESPN, even if we have some doubts over its content strategy and pay TV product performance to date,” stated Investec analyst Steve Liechti.
Shares in BT also fell nearly 3 per cent after the former say telecoms company surprised the market by concurring to pay £246 million a season to show 38 live games.
BT will oust USowned-ESPN, a unit of Walt Disney Co , as the second broadcaster of action in the Premier League, home to clubs like Manchester United, title holders Manchester City and Champions’ League winners Chelsea.
BT is spending £2.5 billion on rolling out its fast, fibre broadband across Britain and sees the deal as a way of driving take-up of its BT Vision tv offering which currently has 700,000 customers.
Other companies have struggled to make a success of Premier League deals, struggling for growth in the shadow cast by BSkyB’s dominance. BSkyB now has more than 10 million customers.
“This move by BT has logic as a way to leverage its broadband infrastructure more effectively but may come as a shock to many investors as the company attempts to boost growth, as cost slicing becomes less of a driver of future earnings,” Deutsche Bank analysts Robert Grindle and Matthew Bloxham said.
Premier League Chief Executive Richard Scudamore, delighted to have sealed such a recession-busting deal, noted that BT had first choice of matches for 18 of its 38 games — an advantage other second broadcasters had not enjoyed. — Reuters
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