Champions League Auction Could Be Open Goal for Britain’s BT
Champions League Auction Could Be Open Goal for Britain’s BT
(Bloomberg) -- The soaring success of English soccer clubs in last season’s Champions League was great news for the U.K. broadcast rights owner, BT Group Plc.
Britain’s biggest phone company now looks well placed to prolong its $6 billion investment in the game after shifts in the sports bidding landscape boosted its chance of securing the rights for three more years at a discount.
BT wants to keep the prestigious European club competition as the core of a slimmed-down sports package without breaking the bank. Money is tight -- the company said in July it might have to cut its dividend as a last resort to accelerate fiber-optic network investment.
So shareholders may take a dim view if BT spends anything like the 1.18 billion pounds ($1.5 billion) that secured it the last Champions League rights in 2017.
Luckily for them, it may not have to. Arch-rival Sky has been playing down the importance of including the Champions League alongside its core English Premier League offering. U.S. tech giants such as Facebook Inc. don’t appear ready to bid for the most expensive soccer packages. And content-sharing deals between pay-TV companies mean Champions League auctions are no longer the kind of all-or-nothing contest that can tempt some to overbid.
“We see an opportunity for BT Sport to make a substantial reduction in their bid for UEFA Champions League,” said Enders analyst James Barford by phone. According to Barford, BT is unlikely to face an aggressive counter-bidder and can offset some of its rights bill by finding a free-to-air partner for a minority of the games.
Competition organizer UEFA this week invited bids for the auction in November of rights for three seasons of the Champions League starting in 2021. It’s added a third, junior European club tournament beneath the top league and second-tier Europa League.
While BT Chief Executive Officer Philip Jansen has acknowledged that top-flight soccer supports demand for its broadband packages, he’s under pressure from the government to improve the U.K.’s internet speeds, invest in 5G wireless and plug one of the country’s largest private pension deficits.
Jansen said in May that BT would be “very disciplined” in bidding for Champions League rights. The company declined on Friday to comment on the upcoming auction.
Like the competition itself, the rights auction always carries the chance of an upset. Losing the rights could mean an uncertain future for BT Sport, which has around 5 million subscribers.
If it does, BT can still lean on a deal with Sky that allows each company to buy sports and entertainment content from the other. The arrangement has been delayed by technical difficulties but is due to launch soon, according to a person familiar with the matter.
“Would I panic if they lost the rights?” said Berenberg analyst Carl Murdock-Smith. “No, because the extent to which content is focused on is sometimes overstated.”
He said BT should be able to retain the rights for less this time around or be willing to lose them as it can still access the matches via wholesale agreements.
Bigger Audiences
Sky appears to have coped well enough since its dramatic loss of Champions League rights to BT in 2015. Now owned by U.S. giant Comcast Corp., Britain’s largest pay-TV broadcaster has instead built its soccer package around the domestic Premier League, where matches such as Liverpool’s tie against Manchester City in January draw audiences of 3 million or more, compared to BT’s peak audience of 1.7 million for last season’s Champions League semi-final clash between Liverpool and Barcelona.
“We’re not wedded to any particular part of the business now. The business is very different,” Sky Chief Executive Officer Jeremy Darroch said at a TV industry conference in September. In 2004, 93% of Sky’s customers were wedded to sport, while now less than half take its sport channels, Darroch said. The company declined further comment.
Web giants Amazon.com Inc. and Facebook have made forays into sport since the last Champions League auction. However, Facebook doesn’t plan to bid for the rights in November, according to a person familiar with its thinking. Amazon, which declined to comment, has never paid the kinds of sums expected to change hands in the auction.
Len Blavatnik’s sports streaming group DAZN has said any push into the U.K. would rely on Premier League rights, tennis and boxing to get it off the ground. Free-to-air broadcasters such as ITV Plc also lack the financial firepower to win the main rights. A spokesman said ITV “always look at interesting new rights packages when they become available.”
To contact the reporters on this story: David Hellier in London at dhellier@bloomberg.net;Thomas Seal in London at tseal@bloomberg.net
To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net;Aaron Kirchfeld at akirchfeld@bloomberg.net
©2019 Bloomberg L.P.