Proactive Investors - Run By Investors For Investors

Premier League auction sees rights fees cool, so is the rivalry now over for Sky and BT Sport?

Sky has retained its dominant position as the majority rights holder, while BT will have Saturday's 'early' kick-off fixtures
Premier League badge
Less is being spent on TV rights this time around

The fortune raised by the Premier League in the latest UK TV rights auction is a bit like Manchester United’s current points tally - not that long ago, it would have been hailed as significant and worth celebrating.

Sure, £4.46bn is a lot of money, but it is a long way from the £5.1bn paid for the current rights period.

Late on Tuesday, it was revealed that five of seven broadcast packages have been awarded with the remaining two fixture bundles still to be sold.

Less competitive bidding?

Sky Plc(LON:SKY) won the rights to the majority of the fixtures on offer for the 2019-2022 period, taking four of the packages. In doing so, it has retained the prime fixtures and has essentially safeguarded its popular ‘Super Sunday’ and ‘Monday Night Football’ branded live broadcasts.

READ: Sky Plc’s ‘bargain’ Premier League rights deal could leave investors wanting more money from Murdoch

Significantly, for Sky, its average price per game has reduced by around 16%, down to £9.3mln from £11.1mln.

BT Group plc(LON:BT.A), meanwhile, bought one rights package that will see it broadcast Saturday’s ‘early’ kick-off fixtures. It is paying a similar price as Sky, at around £9.2mln per game, representing an increase from the £7.2mln paid for the comparable fixture package last time.

Bidding for the match broadcast packages (which are separated according to TV time slots) was described as being much less competitive than in the previous round.

For investors in Sky and BT the news is a relief. Broadcasting elite sport has become an expensive marketing exercise for the pay-TV and telecommunications businesses, and price inflation has been a much-publicised worry.

So what caused the about-turn in the inflationary trend?

Was there a recognition that with live football now on TV almost every day that Huddersfield vs Bournemouth broadcast during Sunday brunch is not very super?

Maybe, there was a realisation that broadcasters are pouring too much cash into the sport, in the wake of a transfer window that saw £75mln change hands for Southampton’s centre back and in which a Leicester winger was deemed worth in excess of £60mln.

Or, maybe even, broadcasters want to save up so they could meet whatever exorbitant fee Wayne Rooney’s agent may seek as the former England captain evidently looks to follow in the punditry footsteps of Gary Lineker, Jamie Carragher and Gary Neville.

The truth is a little bit more boring than that

A recent ceasefire was reached in the sports rights race between Sky and BT, helped by the industry watchdog, and as a result there will be a formal content sharing pact. It will basically mean that viewers won’t be required to pay for separate subscriptions in order to access all the games.

READ: BT scores “good” result in Premier League rights auction - analyst

It also means that there won’t be any real exclusivity to be gained for the companies respective subscription models.

Put more simply, Sky isn’t so pressured to pay a premium price to protect its territory as long as BT is satisfied with broadcasting the smaller package of games and cross-selling all the Sky Sports channels to its broadband subscriber base.

“With BT stepping back from their bold expansion into Premier League screenings, it also brings into question whether the 70% price increase for PL rights over the past four years has finally reached a peak,” said Henry Croft, Accendo Markets research analyst.

Questions and speculation remains over the two outstanding rights packages, and there’s still a possibility of a new entrant from the online streaming sector (notably Amazon has repeatedly been rumoured to have been interested in the auction process).

So, while the rivalry may have cooled between the broadcast and broadband bundlers, a new form of competition may yet emerge.

View full SKY profile View Profile

Sky Plc Timeline

Related Articles

September 20 2017
The Cello Health unit led the way as it grew organically and via the acquisition of Defined Health
mobile phone
January 22 2018
Tremor is already in profit a year ahead of expectations and is a blueprint for similar acquisitions in the future.
Media junkie
February 13 2018
In modern parlance, Ebiquity is making a pivot towards becoming the "world's leading tech-enabled marketing and media analytics consultancy"

© Proactive Investors 2018

Proactive Investor UK 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