BSkyB Open to Wholesale Deal With BT Group’s Sports Channels
British Sky Broadcasting Group Plc (BSY) is open to a wholesale deal with BT Group Plc (BT/A)’s sports channels after the U.K. phone company trumped BSkyB for rights to two of the biggest European soccer contests.
“It’s a two-way thing and if we can get there with BT we’re open to that; we’re keen to do that but we’ll have to see,” Chief Executive Officer Jeremy Darroch said at a conference in Barcelona today. The company already has such contracts with Virgin Media Inc., TalkTalk Telecom Group Plc, Microsoft Corp. and mobile operators.
BT, which signed up more than 2 million customers to its three-month-old BT Sport channels, agreed this month to pay $1.4 billion for exclusive live rights to UEFA Champions League and Europa League soccer games. Shares in BSkyB, the U.K.’s largest pay-TV provider, fell 11 percent on Nov. 11 after the announcement. Money saved from not paying for the Champions League will be invested into new content at BSkyB, Darroch said.
“Sky Sports is in great shape; we’re clear on our priorities,” Darroch said at the conference organized by Morgan Stanley. “Sports is just one of the things we do.”
BSkyB has aired top U.K. soccer games since the Premier League’s inception in 1992. Darroch said the Champions League accounts for less than 3 percent of viewing on Sky Sports, and he emphasized the channels’ airing of cricket, tennis and golf tournaments as well as Formula 1 races and other soccer matches.
BSkyB, in which Rupert Murdoch owns 39 percent, has rights to air 116 matches of the 2013-14 Premier League, the most watched national soccer league, while BT has rights for 38 matches.
“Obviously the Premier League’s really an important part of our sports offering, but the journey on Sky since Day One is to broaden and do new things,” Darroch said when asked how concerned he was that Sky could eventually lose Premier League rights.
BSkyB customers are watching more entertainment than sports, and the Premier League is a small yet important part of that offering, he said.
BT started three sports channels in August and is trying to attract Internet customers by making those channels free for its broadband subscribers. Prices for broadcast rights have escalated, with a four-year deal reached in 2012 by BSkyB’s German affiliate to show the Bundesliga soccer matches boosting average annual income from the German rights to a record 628 million euros ($849 million).
Away from sports, BSkyB is focusing on getting customers to subscribe to more of its products, such as Sky HD; Sky Go, allowing users to watch Sky on mobiles and laptops; and Sky On Demand, in addition to broadband, phone and TV offerings.
“With pricing we’re probably lagging the market a bit,” Darroch said. “The opportunity for us to take pricing up over time is strong.”
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