ESPN to Sell U.K., Ireland TV Channels to British Telecom Giant BT

5:09 AM PST 02/25/2013 by Georg Szalai

UPDATED: The deal comes after the sale of the Walt Disney-owned sports juggernaut's 50 percent stake in its Asian joint venture with News Corp.

ESPN said Monday that it has agreed to sell its U.K. and Ireland TV-channels business, including key soccer rights, to British telecom giant BT Group.

The deal comes after a similar sale of the Walt Disney-owned sports juggernaut's 50 percent stake in an Asian joint venture to Rupert Murdoch's News Corp., its partner in the venture.

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The U.K. deal strengthens BT in its attempt to challenge pay TV giant BSkyB -- in which News Corp. owns a 39 percent stake -- with a sports network set to launch this year. BSkyB does not lose content as a result of the pact, but "it continues to reinforce the sense that BT will spend what it needs in order to be competitive," Sanford C. Bernstein analyst Claudio Aspesi said.

ESPN's U.K. TV business comprises the ESPN and ESPN America channels and their live-sports rights portfolio, including the FA Cup, Clydesdale Bank Scottish Premier League, UEFA Europa League and German Bundesliga.

ESPN Classic is excluded from the proposed transaction, with the company saying it will wind down the channel in the Europe, Middle East and Africa region. It also will shut down ESPN America's TV offerings in the region outside the U.K.

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Financial terms were not disclosed, but the Guardian cited a British TV industry source as saying the deal is worth slightly more than $15 million.

The transaction is expected to be completed July 31, after which BT will continue to operate at least one ESPN-branded channel. It is expected to form part of the BT Sport TV package, set to launch in the summer.

The deal will allow BT to continue to show a host of U.S. sports that now air on ESPN America, including college basketball, college football and NASCAR. The ESPN channels will broadcast from BT Sport's new home at Queen Elizabeth Olympic Park in Stratford.

ESPN will continue to own and operate its digital media businesses in the region, including the broad-based news portal ESPN.co.uk, ESPNcricinfo (cricket), ESPN FC (soccer), ESPNscrum (rugby), ESPN F1 (Formula 1) and broadband streaming service ESPN Player.

Said BT TV CEO Marc Watson: "We are delighted to have reached agreement with ESPN for the acquisition of their U.K. channels business and that we have been able to add some exciting new sports rights to the ones we already have," including the company's first European soccer competition rights. "There will also be the best of U.S. sports available courtesy of this deal, which will further broaden the appeal of BT Sport."

Ross Hair, ESPN's managing director for Europe, the Middle East and Africa, said: "We could not be more proud of the TV channels built and nurtured by our talented team over the past four years. The value of that hard work is reflected in this deal with BT and the continuation of ESPN on television screens across the U.K. and Ireland. The same passion, commitment and innovation will be at the heart of how we develop our strong digital media business into the future."

Sources said ESPN saw the exit from its U.K. TV channels as a strategic decision that was best for business given recent changes in the market -- including the company's losses in rights auctions for the Barclays Premier League and other sports -- and BT's emergence as a player willing to shell out money.

ESPN also continues to focus on other international opportunities, including a multiplatform business in Latin America spanning 19 countries and territories, various networks and services in Australia and New Zealand and its CTV partnership in Canada.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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