U.K.'s BT Names Head of Sports Channel That Will Challenge ESPN, BSkyB

 

 

LONDON - British telecom giant BT has hired sports TV veteran Simon Green to oversee a sports channel it plans to launch here next year to take on Walt Disney's ESPN and U.K. pay TV giant BSkyB.

Most recently CEO of the Boxnation boxing channel in the U.K, Green has in the past also worked for BSkyB and Setanta. He will report to Marc Watson, CEO of BT's pay TV division BT Vision.

After outbidding ESPN earlier this year for two packages of 38 English Premier League soccer games per year starting in 2013, in an investment of $1.15 billion over three years, BT also recently won rights to the British rugby union league from the established sports network in a $245 million four-year deal.

STORY: British Telecom Giant BT Strikes $245 Million Rugby TV Rights Deal

And it has also quietly acquired rights for the U.K. market to the popular soccer leagues in Italy (Serie A), France (Ligue 1), the U.S. (Major League Soccer) and Brazil (Campeonato Brasileiro) starting in 2013.

It is planning to put all the sports on the new channel it will launch next year.

STORY: Analysts Debate Possible ITV, BT Partnership for English Soccer Games

"Effectively, BT's new sports channel is replacing ESPN, and we would expect BT to bid for ESPN's remaining U.K. rights, including the Dutch Eredivisie and Russian Premier League rights that are due for renewal in 2013," UBS analyst Polo Tangsaid in a recent report. "ESPN also has the U.K. rights to the [German] Bundesliga until 2015."

The analyst said BT's strategy is to use sports to drive subscribers to its fiber network-based pay TV service BT Vision, which as of mid-year had 728,000 subscribers, up by 21,000 in the second quarter.

"In addition to acquiring more rights to building up its own sports channel, we think BT will also press the [U.K. media] regulator to get access to more of BSkyB's content at a lower regulated price," said Tang. "BT could then potentially give the content away at cost as part of a bundle in order to drive uptake of fiber."

What does that mean for BSkyB and its stock? "Near-term, the shares may behelped by ongoing share buybacks and strong growth in broadband," Tang said. "Any impact from BT may not be seen until the second half of 2013 when it intends to launch its new sports channel, but nevertheless concerns about the potential impact from BT may weigh on sentiment."

BSkyB's stock has indeed done just fine since the EPL deal announcement, but it fell the day after the news. Sanford C. Bernstein analysts Robin Bienenstock and Claudio Aspesi highlighted that day that BSkyB's deal price tag meant an increase of 40 percent over the previous rights deal, or more than twice the consensus expectation of around 15-20 percent among analysts.

"Skyrocketing live football costs are indicative of wider challenges for BSkyB," they argued, mentioning over-the-top broadband alternatives as another example.

ESPN, meanwhile, will be in for continued tough competition with BT when it comes to future sports rights, some predict. But observers also highlight that ESPN has been focusing on rights deals that it believes can make money, meaning it has in recent auctions made financial offers that it considered financially prudent - even when it lost out to BT.

And the company is focusing over the near-term on new carriage agreements here, which will help it determine how much money it can spend on big sports rights.

"We continue to remain focused on our business, and the wide range of content and coverage we deliver to fans," an ESPN spokesperson said.

Among its major sports deals, the Bundesliga, Europa League and SPL are all locked up until 2015 or further. It also continues to have the rights to Britain's FA Cup next season.

And the network has had ratings success with content that in the U.S. wouldn't draw as much attention, such as in the case of darts.

Meanwhile, the BBC has also felt some impact from the BT sport channel ambitions. The telecom giant recently hired BBC London 2012 Olympic Games production chief Jamie Hindhaugh as COO of its startup network - just days after hiring a BBC announcer to be its face.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai

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