BT Group PLC (LON:BT.A) shares are in a holding pattern in Monday’s early deals as a proposed breakaway European Super League leaves the telecoms and TV bundler exposed.
Scant specifics are yet known about the media strategy for the new league or what it will mean for the existing UEFA Champions League competition, which is the primary lure in BT’s subscription television model.
BT recently renewed its existing exclusivity for European football in the UK, committing to pay £400mln per season for broadcast rights for the Champions League and Europa League competitions for three years beginning with the 2021/22 season.
In the immediate aftermath of the European Super League news, confirmed late Sunday, UEFA threatened to expel the twelve renegade clubs from European club competition.
It includes the ‘Big 6’ English clubs (Manchester United, Liverpool, Chelsea, Manchester City, Arsenal and Tottenham) along with Spain’s Real Madrid, Barcelona and Athletico Madrid, and Italy’s Juventus, AC Milan and Inter Milan.
The fall-out could have immediate repercussions not just for the clubs and UEFA, but also existing media partners like BT.
It is not yet clear whether the current tournaments will be affected. Nonetheless, three of the four clubs in the upcoming Champions League semi-finals – Real Madrid, Chelsea, and Manchester City – are among the cabal of breakaway clubs, whilst Manchester United and Arsenal make up two of the four semi-finalists in the Europa League.
The proposals effectively remove significant competitive jeopardy from domestic leagues, because league positions will no longer determine which clubs qualify for European competition, and as such the breakaway league also threatens to substantially devalue the Premier League.
Exclusive broadcast of Premier League and Champions League fixtures has been the flagship offering in BT’s television business, which generates revenue from direct subscriptions and also via third-party distribution via Sky.
Significantly, the bundling of BT Sports to BT’s broadband and telecoms customers has proven to be a key differentiator in a competitive broadband market.
Early speculation suggests online streaming may be a key aspect of the broadcast strategy for the new league, to further disrupt the model for ‘bundler’ broadcasters like BT and Sky - it is somewhat ironic (and perhaps a little instructive) that in the early nineties the 'breakaway' Premier League played a pivotal role in the launch and subsequent domination of Rupert Murdoch's Sky satellite TV business. Whether or not the European Super League can do the same for streaming platforms will remain to be seen.
DAZN, backed by Ukranian-born billionaire Len Blavatnik, was named by Italian media outlets as a collaborator in the proposed breakaway league, before the streaming platform denied any involvement hours later.
Amazon Prime has similarly edged into the football streaming business in recent years, most recently in September acquiring the rights to 20 Premier League games per season from 2019/20 to 2021/22 as part of a £5.13bn UK broadcast deal which sees Comcast owned Sky taking 126 games a year whilst BT shows 42.
Changing hands at 154.85p in London, BT shares were up 0.3% in Monday’s early deals.