BT in £633million Eurosport merger
BT hAS signed a deal worth hundreds of millions of pounds with a US media giant that will merge their sports offerings.
The tie-up with Warner Bros. Discovery will see BT Sport combine with Eurosport, giving customers access to content including the Uefa Champions League, Premiership, the Olympic Games, tennis Grand Slam tournaments and the Tour de France.
The tie-up is also expected to make the business stronger when bidding for broadcasting rights thanks to the financial firepower of Warner Bros. Discovery, which is worth around £33bn.
Under the deal, BT will transfer the BT Sport business to Warner Bros. Discovery but retain a 50pc stake in the new venture, which will be chaired by Marc Allera, the head of its consumer division.
The FTSE100 telecoms group will receive £93m as well as up to £540m in future if certain conditions are met, giving the agreement a total value of £633m. BT boss Philip Jansen said the tie-up had created a ‘global content powerhouse’. Shares gained 1pc, or 1.7p, to 178.15p.
Initially, the venture will mean BT Sport customers will receive more content for the same price as their current contract, although higher fees in future were not ruled out.
BT revealed it was in talks with Warner Bros. Discovery over a possible deal for BT Sport in February after turning down a sale to streaming group DAZN, which is backed by billionaire Leonard Blavatnik, one of Britain’s richest men.
The combination sets the stage for an intense battle over the broadcasting rights for European sport, with Warner Bros. Discovery facing stiff competition from US rival Comcast, owner of Sky.
‘Sports rights are highly prized as events such as football are one of the few areas guaranteed to attract to attract live viewers as opposed to people watching via catch-up,’ said Russ Mould, investment director at broker AJ Bell.
‘Therefore, having a partner with deeper pockets to help fund the cost of securing rights, as well as adding Discovery’s existing Eurosports channel to the mix, looks an attractive combination.’
News of the deal came as BT reported a 9pc rise in profits to nearly £2bn for the year to the end of March and restored its full-year dividend. The upbeat figures came despite a 2pc slip in revenues to £20.9bn as it was hit by supplychain problems and an ongoing recovery from Covid-19.
Its cost-saving target for the end of 2025 was also hiked to £2.5bn after it delivered £1.5bn in savings over the last 12 months.
Meanwhile, Jansen said the company was continuing to ‘build like fury’, noting that BT’s 5G mobile network now covered more than 50pc of the UK population.
The firm has also been pouring money into an expansion of its fibre broadband as part of the chief executive’s strategy to reach 25m UK premises by 2026.
In its results, BT reported its fibre offering was currently available to 7.2m properties.
Despite the rise in profits, analysts voiced concerns that the cost of living crisis could hit the telecom group’s business as well as the new sports joint venture.
Keith Bowman, at interactive investor, said rising prices could ‘force some customers to cut back non-essential purchases and subscriptions’ including for BT Sport.