BT Sport’s stranglehold on Champions League football is set to be challenged as Sky prepares to enter the battle for the £1bn-plus TV rights when bids are submitted on Monday.
BT, which has aired Champions League football since 2015 after beating joint holders Sky and ITV with a blockbuster bid, had not been expected to face a serious challenge to secure the next round of UK TV rights for the three years from 2021-22.
Following the dip in the value of the last Premier League rights auction – considered a sign that the recent inflationary rise in prime sports rights was at an end – BT was potentially hoping to make an investor-pleasing saving on its current £1.2bn Champions League deal. Industry observers speculated that it might save £50m to £100m a season.
In last year’s Premier League auction, Sky shaved £200m a year off its previous deal, or 16% a game. Sky, which sources say is preparing a “financially disciplined” bid for the Champions League rights, had not been expected to enter the auction, which would significantly add to its £3.5bn annual sports rights bill.
Now, with the spectre of their big rival looming, BT chiefs will have to rethink the risk of submitting any lower bid. The company can ill afford an own goal by losing the biggest attraction in its premium-sport-driven television strategy.
James Barford, an analyst at Enders, said: “The Champions League matches are a core part – along with Premier League matches – of BT’s offering, and their loss would have implications for BT’s pricing across retail and wholesale, but it would be unlikely to be terminal for BT Sport.”
With BT in the midst of a £1.5bn cost-cutting drive that includes the loss of 13,000 jobs – and facing a potential dividend cut to help fund the billions the company will need to spend rolling out next-generation broadband across the UK – investors are in no mood to approve a bigger cheque for football rights.
“From the perspective of BT’s shareholders, a rise in Champions League rights costs would be totally unacceptable in our view,” says Barford.
Other bidders for Champions League rights are thin on the ground. While audiences have been good in terms of pay-TV viewing, particularly with the last final an all-English clash between Liverpool and Tottenham, the competition has been starved of the profile and scale that a free-to-air TV partner could bring.
Rumours have circulated that the competition’s governing body, Uefa, is keen to have such a broadcaster back on board, possibly by restructuring the auction to make it viable for the lesser-resourced free-to-air players. Sky is not thought to be seeking involvement with another bidder in the style of its former tie-up with ITV.
For ITV, it would be a huge commitment to submit a competitive bid, particularly since it has already redirected £65m in spending until the end of next year to make a success of its new streaming service, BritBox, which launched last week.
In the wings lurks Amazon, which last year broke Sky and BT’s stranglehold on Premier League rights with a groundbreaking deal to livestream exclusive coverage of 20 matches a season. Amazon will broadcast its first matches next month. While a market value of more than $880bn certainly gives it the financial firepower to make a move, it is more likely to want to focus on its initial foray into top-flight football, hoping for a return on investment in driving its Prime Video streaming service.
Philip Jansen, BT’s chief executive, who took over from Gavin Patterson in February, has highlighted the importance of Champions League football to the company’s TV strategy – if the final happens to feature two English teams. BT’s call centres, he said, had seen an “astounding” amount of traffic from fans seeking to sign up as Liverpool and Tottenham prepared to play the first all-English final since 2008.
Two years ago, BT and Sky struck a landmark deal allowing customers access to each other’s sports channels without having to buy separate subscriptions. It was a move that ended years of hostilities between the two companies, with analysts arguing that the incentive to secure exclusive sports rights had diminished.
Monday’s Champions League rights auction will be a test of whether the old sparring partners are ready to fight again.