BT pays 897 million pounds for football rights in challenge to Sky

UK telecoms incumbent BT has signed a £897 million ($1.43 billion) deal for rights to screen Champions League and Europa football matches in another move aimed at breaking the dominance of British Sky Broadcasting in the country’s pay-TV market.

The agreement follows the operator’s £738 million deal in 2012 for rights to broadcast 38 English Premier League matches over the next three years and may put further pressure on company profits.

UK telecoms incumbent BT has signed a £897 million ($1.43 billion) deal for rights to screen Champions League and Europa football matches in another move aimed at breaking the dominance of British Sky Broadcasting in the country’s pay-TV market.

The agreement follows the operator’s £738 million deal in 2012 for rights to broadcast 38 English Premier League matches over the next three years and may put further pressure on company profits.

BT (London, UK) has heralded its latest football move for representing the first time a single UK broadcaster has won exclusive rights to all matches from both the European competitions.

“I am thrilled that BT Sport will be the only place where fans can enjoy all the live action from the UEFA Champions League and UEFA Europa League,” said Gavin Patterson, BT’s chief executive. “The live rights will give a major boost to BT Sport and give people yet another reason to take our terrific service.”

The move could help to shake up the country’s market for pay-TV football content, which has been effectively controlled by Sky (London, UK) over the past few years.

BT appears to have seen off competition for the rights from both Sky and terrestrial broadcaster ITV (London, UK), both of which issued statements saying they were not prepared to pay what BT eventually offered.

“It seems BT chose to pay far in excess of our valuation … We take a disciplined approach and there is always a level at which we will choose to focus on something else,” said Sky, as quoted by Dow Jones Newswires.

BT’s focus on sports content has helped the operator to compensate for a decline in revenues from traditional telephony services and attracted new customers to its broadband packages.

Despite the cost of new rights, the operator expects its latest deal to “drive additional growth in BT Consumer revenue and profits over the medium term”.

It says it will put down a deposit of around £60 million in November 2013 and pay the rest of the fee in six monthly installments beginning in November 2013.

Emphasising that its financial guidance remains unchanged, the company noted that it is expecting to generate free cash flow of around £2.3 billion this financial year, £2.6 billion in 2014/15 and to report an even higher figure for 2015/16.