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BSkyB Competitor BT Reaches More Than 1 Million Sports Networks Subscribers

Wayne Rooney - P 2012

The British telecom giant has been spending money on soccer and rugby TV rights to challenge the dominance of the pay TV company.

LONDON – U.K. telecom giant BT, which has been increasingly competing with pay TV powerhouse BSkyB, has reached more than 1 million subscribers for its BT Sport networks launched at the start of the month.

BT acknowledged, though, that the majority of subscribers are existing broadband customers who can get the sports channels for free. As of late July, BT had reported 500,000 customers for BT Sport, meaning it has seen a pickup in take-up rates in the past few weeks.

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The company has been on a sports rights shopping spree, which has included key soccer and rugby rights, to give broadband and pay TV subscribers an incentive to stay with or join its service. Earlier this year, BT acquired ESPN’s U.K. and Ireland TV channels business, adding to its two new sports channels.

Among its sports content offers are 38 live Barclays English Premier League soccer games this season, starting this coming weekend. Analysts have said they expect to get more clarity on BT's ability to sign up new subscribers or even lure customers away from BSkyB after the season has begun.

"We are thrilled with the initial interest shown in BT Sport and the viewing figures to date," said John Petter, managing director of BT consumer. "To have a million households onboard before the Barclays Premier League has even begun is terrific. We said we would return sport to grassroots fans, and they are cheering in large number."

Setanta, a company that tried to take on BSkyB via a sports offering in the past, needed about four months to reach the 1 million subscriber mark. However, its subscribers were all new paying users.

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BT had previously reported more than 800,000 subscribers for its BT Vision pay TV service as of the end of June, compared with more than 10 million for BSkyB.

Analysts are following closely to gauge the impact on BSkyB, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake. "We do not believe BSkyB subscribers will leave en masse to take up BT Sport," UBS analyst Polo Tang wrote in a recent report. However, by bundling the sports channels with BT broadband for free, BSkyB could see a slowdown in terms of its broadband growth, he said then.

Tang's conclusion: BSkyB's stock may remain under pressure "until after the start of the new Premier League season in August, when take-up of BT Sport becomes clearer."

Said Petter: "We always said that BT Sport would help us retain and attract broadband customers, and that is proving to be the case. We are rewarding our customers for their loyalty, and the strategy is working."

He added: "These are early days, but we plan to make the most of this initial surge in demand. Huge numbers of customers are signing up every day, which is testament to how fresh, vibrant and exciting the channels are. The market needed a new entrant to shake things up, and that is precisely what we are doing."

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai