Pay-TV operator Sky Deutschland has agreed a deal to make available top-flight German soccer matches to Deutsche Telekom clients, tapping into the telecom operator's subscriber base.
Deutsche Telekom (Bonn, Germany) has been showing Bundesliga matches on its Entertain internet TV platform but lost the broadcast rights to Sky (Unterfoehring, Germany) in an auction last year.
The agreement announced on Friday, gives Sky access to Entertain's 1.9 million customers and will force subscribers to the platform's Bundesliga package - called "Liga Total" - to switch to Sky contracts from the 2014/15 season.
Sky expects a "good portion" of Telekom's 190,000 "Liga Total" subscribers to sign new contracts by the end of the 2013/14 season, Sky Chief Executive Brian Sullivan told journalists during a conference call.
Sky currently has about 3.2 million subscribers.
Shares in Sky Deutschland, part-owned by Rupert Murdoch's News Corp, rose to a 3.5-year high on news of the deal and were up 1.9 percent at 4.44 euros by 6.34 a.m. ET.
"Sky has improved its market position significantly. Especially the possible cross-selling of the Sport (pay-TV subscription) package including Champions League will be earnings accretive," DZ Bank analyst Harald Heider said.
Telekom, whose shares rose 0.5 percent to 8.80 euros, did not say how much it was paying Sky.
The loss-making pay-TV firm is shelling out a total of 485.7 million euros ($636 million) per season for cable, satellite and internet TV rights together.
Sullivan said the deal with Telekom would have no impact on Sky's outlook for this year, which sees the company returning to core operating profit.
Germany's Bundesliga matches draw an average television audience of about 18 million people, only about a sixth of the U.S. Super Bowl's viewership but still representing almost a quarter of soccer-crazy Germany's population.
The agreement between Telekom and Sky will run until mid-2017 and also allows Telekom customers to subscribe to Sky's other packages offering further sport, film and high-definition (HD) channels.
(Reporting by Maria Sheahan and Victoria Bryan; Editing by Hans-Juergen Peters and Mike Nesbit)