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Confirmed: BT's Got Euroballs

BT has dealt a significant blow to UK rival BSkyB by outbidding Rupert Murdoch's satellite broadcaster for the exclusive rights to UEFA Champions League and UEFA Europa League soccer coverage for three years starting in 2015.

BT Group plc (NYSE: BT; London: BTA), which entered the sports broadcasting market only this year to bolster its TV-over-broadband lineup, bid almost €1.08 billion (US$1.44 billion) for the exclusive rights. (See BT's Got Balls.)

Currently, Sky and UK terrestrial broadcaster ITV share the much sought-after UEFA Champions League rights, which allow live broadcasting of hundreds of games featuring major teams such as AC Milan, Barcelona, Bayern Munich, Chelsea, Manchester United, Real Madrid, and many others.

Winning the exclusive rights is a major coup for BT and will provide it with major pulling power as it seeks to retain and attract broadband customers: Indeed, BT noted that the rights "are expected to drive additional growth in BT Consumer revenue and profits over the medium-term."

No doubt there will be plenty of questions from investment analysts coming BT's way today as the operator claims that the cost of the deal does not change BT's financial outlook: That must be quite the complicated forecast...

Whatever the explanation and reasoning, you have to admire BT's confidence, its willingness to be aggressive in a highly competitive market, and its commitment to a broadband-based strategy.

In terms of its position in the UK market, BT has clearly decided (rightly, in my view) that the only way to survive in the retail consumer communications market is to build and retain a significant broadband customer base that can drive revenues either through the delivery of BT's own services (such as the sports content) and advertising and through partnerships with third parties that want to ride on a trusted connection with guaranteed service levels. And in outbidding BSkyB, BT has shown significant commitment to its sports service.

Winning these exclusive rights is a big deal for BT in many ways: It has scored a significant goal both in terms of its broadband content strategy and against a fierce rival. But it's early in the game. BT will need to have a long-term strategy in place if this is to make financial sense and have already considered the answers to a few key questions, such as: What is its bidding strategy when negotiations for the European soccer rights for 2018 and beyond begin? What might the impact of widespread 4G LTE availability have on the consumer broadband market? What impact might the success (or lack of it) of British soccer teams in Europe during the next two years have on the potential attraction of such expensive sports content rights?

Those are longer-term implications. The first thing BT will need to consider is the response of BSkyB, which won't back off from a fight. It's very likely that BSkyB will channel the funds it will no longer need for European soccer in the 2015-2018 period into winning even more rights to domestic English Premier League coverage, which is of even greater value in the battle for British eyeballs.

There's no doubt BT's got balls -- but can it protect them from a BSkyB backlash?

— Ray Le Maistre, Editor-in-Chief, Light Reading

macster 11/12/2013 | 2:36:09 PM
Re: Not enough just to buy sports rights Not sure..... but I strongly suspect that BT is going into this based on certain views that the end is nigh for cable (and satellite?), particularly TV. They based this on figures like..... Comcast and such gaining broadband subscribers but losing video subscribers. That users will just want fast and unlimited broadband, then cherry pick what they watch, e.g. Netflix.

Let's see what happens. Interesting times :)

[email protected] 11/12/2013 | 3:51:22 AM
Not enough just to buy sports rights If BT is to capitalize fully on this opportunity, it needs to invest in two other areas of its business:

1) Its CDN capabilities -- the secure delivery of that content with great quality will become even more important if customers churn to BT because of this content 9and BT wants to retain them)

2) Customer service. STill the area where the telcos consistently score a big own goal. Why this isn't a no-brainer is beyond me but it still seems to be down the pecking order.
[email protected] 11/12/2013 | 3:43:42 AM
Re: BSkyB stock tanks - can BT go the distance? re ITV - yeah, that's a bummer for them. They will certainly be scrambling for highlights but those big games on a Tuesday and Wednesday evening have become its sports lynchpin.

Re BSKyB -- maybe they know something BT doesn't? (And I wouldn't say that's not possible....) It's going to be a big hole for Sky to fill, though and foryoung sports fans that could be a real draw for BT Sport.

But absoliutely - it would be fascinating to know the different scenarios BT had worked on and the business plan behind the bid.
macster 11/11/2013 | 7:23:45 PM
Re: BSkyB stock tanks - can BT go the distance? I dunno.....

There was only one round of bidding - very telling indeed. If CL football was really that important to Sky, I am sure they would have bid more (if I'm not mistaken, their bid was barely half of BT's).

A percentage of CL matches will have to be shown for free, that's part of the deal. This includes the CL final. I am a  big fan of football but 1). don't get the chance to watch that many games 2). can't be bothered to watch some CL games, especially group stage games 3). watch more league football (English, Spanish, etc.), golf, etc. Am sure there people like this. To quote, Premier League represents 18% of viewing for Sky's channels. If Sky were to lose these and other sports (golf, etc.), then it's a concern.

It would be interesting to see the figures BT were playing with when they came up with this strategy.

Oh, spare a thought for ITV.....


PaulERainford 11/11/2013 | 7:22:41 AM
Re: BSkyB stock tanks - can BT go the distance? Come on Ray, how can you not love a sport where players break for tea?
[email protected] 11/11/2013 | 7:20:51 AM
Re: BSkyB stock tanks - can BT go the distance? WHo knows to what lengths BT might go to try and snatch other Tier 1 sports content from BSkyB's grasp!

Then there's the cricket....
PaulERainford 11/11/2013 | 7:13:07 AM
Re: BSkyB stock tanks - can BT go the distance? More importantly: what about the live cricket? Will BT stump up for that?
[email protected] 11/11/2013 | 5:46:11 AM
BSkyB stock tanks - can BT go the distance? To show how important these European soccer rights are to BSkyB, its share price slumped by about 10 percent Monday morning as investors reacted to the news that BT had beaten out Murdoch's giant to the Champions League coverage.

So, BT has scored a significant goal and BSkyB will now need to react. I expect it will go on the offensive (possibly in more ways than one...)

BT has picked a fight with a heavyweight - can it go the distance?
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