Sky Deutschland Ends Feud With Deutsche Telekom

3:03 AM PST 1/4/2013 by Scott Roxborough

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Alexander Beir/Getty Images

News Corp.'s German pay TV giant returns to the company's IPTV service after outbidding Telekom for top soccer rights.

COLOGNE, Germany – German pay TV group Sky Deutschland, in which Rupert Murdoch's News Corp. owns about 50 percent, capped what has been a turnaround year with a deal to begin carriage on its main rival - Deutsche Telekom's IPTV service Entertain.

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The agreement, announced Friday, will see Sky Deutschland's entire pay-TV offering made available to Telekom's Entertain subscribers starting this summer. It is the first time Entertain, Germany's leading IPTV operation, will carry Sky, Germany's premier pay-TV service.

Telekom had tried to position Entertain, which is piped directly to Telekom's broadband customers, as an alternative to Sky and had siphoned off some of Sky's pay-TV subscribers. The teleco giant was a deep-pocketed bidder for rights to Germany's Bundesliga soccer, Sky's premiere programming asset. But Sky, in which Rupert Murdoch's News Corp. holds a 49.9 percent stake, shut out Telekom with a bold $2.5 billion (€1.94 billion) deal last April to take all pay, web-TV and IPTV rights to Bundesliga games for the 2013-2017 seasons.

The deal left Telekom with little choice but to deal with Sky, or give up its soccer-mad subscribers accustomed to streaming Bundesliga matches on Entertain.

The final agreement will see Sky and Telekom cooperate for the length of the Bundesliga deal – from mid-2013 through mid-2017. Both companies will coordinate their marketing for Sky's services on Entertain.

It's another feather in the cap of Sky Deutschland CEO Brian Sullivan, who has proved doubters wrong by showing that it is possible to make money in German pay-TV. Sullivan ended 2012 with two straight profitable quarters after years of losses. Investors have embraced the long-suffering broadcaster. Sky Deutschland was the top gainer among European entertainment stocks last year as its shares nearly tripled to $5.45 (€4.13).