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BT makes further inroads into Sky territory as spending on Premier League TV rights grows by 70% compared with earlier deal.
The English Premier League (EPL) has raised a whopping £5.136 billion ($7.83 billion) from an auction of rights to screen soccer matches between 2016 and 2019 thanks to fierce bidding by Sky and BT.
The amount is a huge increase on the £3 billion ($4.58 billion) raised from an auction of rights over the 2013 to 2016 period and demonstrates the value that TV players attach to premium sports content. (See BT, EE Put Squeeze on Broadband Rivals and BT Wins Soccer Deal.)
While pay-TV giant Sky still remains the dominant player in this market, fixed-line telecoms incumbent BT Group plc (NYSE: BT; London: BTA) has emerged as a major force. In June 2012 it paid £738 million ($1.13 billion) for Premier League rights between 2013 and 2016 and it followed that move up in late 2013 when it spent almost £900 million ($1.37 billion) on three-year rights to show Champions League football. (See BT Pays €1B+ for Euro Soccer Rights .)
BT made further inroads into Sky territory during the latest Premier League auction, securing rights to screen 42 matches in each of the three seasons between 2016 and 2019.
Under its previous arrangement, BT was allowed to show 38 matches in each of the seasons between 2013 and 2016.
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Even so, BT's eagerness to tackle Sky is proving costly. The latest rights will set the operator back a total of £960 million ($1.46 billion), or £7.6 million ($11.6 million) per game. That's 18% more than BT spent per game for rights over the 2013 to 2016 period.
Seeking to allay concern among investors about further heavy spending on football rights, BT has insisted that its sports offensive is paying off by helping it to reduce churn, attract new customers and boost revenues and profits at its consumer division.
Its outlay also looks modest in comparison with that of Sky, which is to fork out £4.176 billion ($6.36 billion) on rights to show 126 matches each season between 2016 and 2019.
That works out at more than £11 million ($16.8 million) per game and is 83% more than the cost of Sky's existing contract. As Sky noted in its statement on the deal, the price per year is about £330 million ($530 million) more than analysts were expecting.
Forced into lavish bidding to protect its crown jewels from a BT assault, Sky will also be under pressure to justify its strategy to the investment community.
It has already indicated it will have to find new cost savings to prevent prices for end customers from going up.
"The company will work hard to minimize the impact of higher rights costs on customers, with the majority of the funding coming through substantial additional savings to be delivered by efficiency plans," said Sky in a company statement.
While BT's arrival on the sports scene has weakened Sky's control over the sector, it has led to few obvious benefits for end customers. Matches are now divided up between rival service providers and -- despite Sky's assurances that savings will help pay for rights -- there is a clear risk that BT and Sky will look to pass costs on to their TV subscribers.
— Iain Morris,
, News Editor, Light Reading
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