BSkyB plummets after BT's Champions League deal

BSkyB plummets after BT's Champions League deal

Shares in British Sky Broadcasting (BSY) have plunged over 10% as rival BT (BT.A) secured exclusive live broadcast rights to all UEFA Champions League and Europa League football matches.

The deal covers the three years from 2015/16 and will see BT pay a £60 million deposit this month, followed by six-monthly installments from July 2015.

Sky hit back at BT, however, saying the €1.075 billion (£900.5 million) it paid for the rights was "far in excess" of their value.

Sky and ITV (ITV) shared the previous three-year contract, paying £405 million altogether.

Shares in BT were flat on the morning of the announcement, probably due to concerns over the price, but BT said its financial outlook would not be affected as the new broadcasts would drive revenue growth.

Analyst view

Mike van Dulken, head of research at Accendo Markets, commented: "While expensive, some might consider today's acquisition price attractive given BT's recent success in improving its customer retention after it began offering BT Sports for free in October to all broadband subscribers, and it obviously had to pay a premium for exclusive rights which are worth more than a shared offering."

He wondered whether the move could help customer retention turn into customer poaching, therefore hurting Sky more, or whether brand loyalty would prevail and Sky subscribers just change to BT Broadband to allow them to view BT's sports offering via Sky. The latter could mean it was a potential boon for both providers.

But Investec analyst Steve Liechti was less hopeful for Sky, describing the acquisition as the "worst case scenario" for the company.

"We expect increasing investor concern over the 'next' content package auction and the next Premier League auction becomes vital," he added.

However, van Dulken pointed out that Sky still owns the right to broadcast two thirds of UK Premier League football, while BT offers the remaining third.

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