BT Sees Champions League as Step to Soccer Dominance

BT Group Plc, the phone company that wrestled TV rights to the two biggest contests in European soccer from British Sky Broadcasting Group Plc, said that those contracts could position it to bid for more content.

The carrier has the opportunity to increase its rights for England’s Premier League soccer in the future after winning an exclusive deal to air UEFA’s Champions League and Europa League games for three years starting in the 2015-16 season, Chief Executive Officer Gavin Patterson said yesterday at an investor conference in Barcelona.

“What we’ve been able to do in getting the Champions League, it’s given us better optionality into the Premier League,” he said. “We can take different positions, we’re not necessarily boxed in.”

Going more aggressively after the top U.K. soccer games would allow BT to add further pressure on BSkyB, which has aired those matches since the Premier League’s inception in 1992. BT, which signed up more than 2 million customers to its three-month-old BT Sport channels, already owns the rights to 38 Premier League games, soccer matches in Italy, France and Brazil, rugby competitions, and tennis tournaments.

This month, BT agreed to pay $1.4 billion for Champions League and Europa League. Shares in BSkyB, the U.K.’s largest pay-TV provider, fell 11 percent on Nov. 11 after the announcement. London-based BT, which offers most of BT Sport free to broadband customers, will charge a “modest” subscription fee for the European games, Patterson said.

BT declined less than 1 percent to 375.10 pence at 8:43 a.m. in London. The shares have risen 62 percent this year. BSkyB shares dropped less than 1 percent to 830.50 pence in London.

Attracting Customers

BT is able to fund the spending on sports rights as its rollout of fiber-optic broadband ends and the company cuts costs in other parts of the business, Patterson said at the conference organized by Morgan Stanley.

“The Champions League and Europa League rights enhance the current strategy significantly and will bring in incremental broadband customers,” Patterson said. “They strengthen our wholesale revenue, they stretch our ad revenue and they will make a big difference on pubs and clubs.”

BSkyB is open to a wholesale deal with BT’s sports channels, CEO Jeremy Darroch said at the Barcelona event. The company already has such contracts with Virgin Media Inc., TalkTalk Telecom Group Plc, Microsoft Corp. and mobile carriers.

“Sky Sports is in great shape; we’re clear on our priorities,” Darroch said. “Sports is just one of the things we do.”

One Percent

At the same conference, commercial broadcaster ITV Plc said losing broadcast rights won’t hurt advertising and the 299 million-pound ($482 million) price per season paid by BT was too high.

“We’re very clear-eyed about what sport does for us and over the years we have a very sophisticated model to decide the value,” CEO Adam Crozier said. “We got to the level where it didn’t make financial sense.”

ITV plans to invest in other “high-quality content,” Crozier said. The UEFA Champions League and Europa League games that BT won this month typically represent less than 1 percent of viewing. Other programs can achieve that at a fraction of the cost, he said.

Patterson said BT could consider offers for its global enterprise business, if a company makes a bid showing its worth more to the buyer than to BT.

“Ultimately is there a price on global services? Never say never,” Patterson said.

BT is trying to increase its credit rating to BBB+, which would require cutting the company’s net debt to 4 billion pounds ($6.4 billion) to 5 billion pounds, Patterson said. That may happen in two or three years, he said. Standard & Poor’s now rates the company one level lower at BBB.

“That’s our focus,” Patterson said. “Reducing debt, continuing to invest in the business.”

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