Sky vs. BT – Football’s Battle of the Billions?
Published: 06 Apr 2016
With the mother of all deals set to kick in this Premier League season, Siddharth Kohli, of Loughborough University, London, takes a brief look into the UK’s burgeoning pay-tv football market.
Mid-2012 saw the beginning of what would go on to be a sea change in the broadcasting of sport in the UK. The sphere, which had largely been dominated by Sky, having seen off competition from the likes of ITV, Setanta and ESPN over the last decade, was now witnessing the emergence of a new player, backed by Britain’s largest telecoms conglomerate, the BT Group. On the back of an over £738 million deal, BT sent shockwaves through the market, winning the rights to showcase Premier League matches. The surprise deal saw the annual income of leading Premier League clubs grow by £30 million, and was largely seen as a coup for an organisation known as a leading service provider in a sector becoming increasingly redundant.
BT went on to acquire ESPN’s UK and Ireland channels, adding the FA Cup, Europa League and Bundesliga to its portfolio. The same year, BT won the rights to broadcast the Champions League, in a mammoth, 3-year deal worth £897 million. The deal blew Sky and ITV out of the water, as the two broadcasters had previously shared rights to telecast Europe’s showpiece club football tournament. The eye-watering deal divided opinion amongst the two leading camps. While BT stated that the deal was more valuable than it cost the organisation, BSkyB retorted by stating the outlay of nearly £300 million per year was unjustifiable.
Though it could be argued that the rights were worth more to BT, as live sports programming could perhaps boost demand for BT’s broadband service, the deal came as a hammer blow to Sky, leading to a very public war-of-words. In a bid to seemingly soften the blow, Sky stated that Champions League viewership had been declining and only a handful of matches came anywhere close to the numbers generated by Premier League matches. BT responded by stating that Sky had fought tooth and nail to secure the rights, and were not pleased at their inability to match BT’s mammoth outlay.
BT’s seemingly aggressive forays into capturing popular sports properties thus far were soon to be bettered – by an audacious swoop.
When the Premier League announced a record-shattering £5.13 billion deal with BT and Sky in February 2015, BT Sport elevated itself from being the latest in a series of pretenders to Sky’s crown, to the emerging but definite alternative in the market. The near 70 per cent increase in the value of the rights had a tremendous impact on the earnings of the clubs, with likes of Sunderland and Watford set to pocket a cool £80 million from TV rights alone. To put this figure into some perspective, Spanish giants Atlético Madrid earned £31 million from TV rights last year.
The far-reaching impacts of the deal predictably affected the share prices of the organisations, with Sky shares down 4 per cent and BT shares up 3.5 per cent following the announcement of the deal.
Beyond the markets for stocks and player transfers, the deal promises to increase investment in grassroots football, with an estimated £85 million to be utilised for community projects and good causes.
While BT’s ‘strategic’ foray into sport broadcasting may or may not be heavily influenced by the declining number of landline phones, it appears to be a timely one. Ed Vaizey, the Culture Minister recently stated that telecommunication providers might not be allowed to charge broadband customers for landline connections they do not use.
Finally, whether you are more Carragher and Henry, or Lineker and Owen, or simply the bloke who’d rather illegally live stream a match, than pay over £1000 a year for Sky and BT subscriptions, this rivalry may indeed define the direction European football takes in the decade to come.
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