Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

BT and Sky may play nice in next Premier League rights bid, UBS suggests

BT and Sky's content sharing deal removes risks over the next bidding round for the broadcasting rights to Premier League football, UBS said
BT
BT and Sky have agreed to supply each other's content to customers

BT Group PLC (LON:BT.A) and Sky PLC (LON:SKY) have little incentive to bid aggressively for the next auction of Premier League broadcasting rights after agreeing to supply each other's content, analysts at UBS said.

The companies on Friday announced a deal that will allow BT to sell Sky’s Now TV video streaming service – which includes Sky Sports, Sky Cinema and Sky Atlantic – to its customers and for Sky to offer BT Sports channels to its viewers.

READ: BT shares gain on deal with rival Sky to supply each other's TV channels

BT and Sky have been long-time competitors in the bidding war for Premier League and Champions League football rights with overall costs having risen 70% over the past two auctions. For this season’s Premier League rights, BT has paid £320mln while Sky has paid £1.4bn.

“The tender for the next cycle of Premier League rights (2019/20 to 2021/22) has just been issued with the auction expected in February 2018, and we think consensus is factoring in inflation of up to +40%,” UBS said.

“However, with this reciprocal content deal, we think there is limited incentive for either Sky or BT to bid aggressively in the auction.”

UBS said BT’s share price has been weighed down by concerns about rising costs of securing sports rights as well as uncertainty over capital expenditure in its planned broadband network upgrade and its pension deficit.

It thinks the content deal with Sky significantly reduces the risk around the Premier League rights auction for BT. 

“With BT now having access to an improved content offering, we think its triple-play offering will be more competitive versus both Virgin Media and TalkTalk,” UBS said.

READ: Sky says it could shut down Sky News if it gets in the way of takeover by Murdoch's Fox

The deal also lowers the risk for Sky, UBS said, adding that it may allow for greater visibility on longer-term profitability.

BT's distribution of Now TV should also improve Sky's net adds momentum, UBS said.

“While the deal will lead to higher wholesale programming costs for Sky, we expect this to be offset by additional revenues from Sky subscribers paying Sky directly for BT Sport rather than BT.”

View full BT.A profile View Profile

BT Group plc Timeline

Related Articles

1504096349_shutterstock_420468130.jpg
February 19 2018
It also confirmed it expects growth for the full-year to be in line with market expectations

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use