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Can BT mount a serious sports challenge to Sky?

It looks like it’s giving it a damn good go with news emerging that the former UK state-owned telephone supplier is planning two new pay sports channels for football and rugby plus a third for one-off pay-per-view matches, an offer that could blow a whole in BSkyB’s Sky sports business model (and, indeed, BT’s own).

BT Sports has landed 18 ‘first pick’ Premier League football matches for the 2013-14 season, the key element in its £1bn challenge to Sky. Sky therefore will have only marginally more at 20, leaving football junkies little choice but to pay for both broadcasters. Which is all very nice for the fat cats of the Premier League but not so good for fans.

But BT has also said it will offer packages to other broadcasters including pay-TV rival Virgin Media and ITV if the price is right, potentially blasting another hole in Sky’s defences.

To date Sky has seen off all its rivals in the sports business including Irish upstart Setanta and, latterly, Disney’s ESPN which lost out to BT in the most recent bidding round. But now Sky may need to think about broadening its offer to include more popular general entertainment shows (it spends a fortune on exclusive channel Sky Atlantic but not that many people watch it). It may also have to compete on price for the first time, which would make its executives like highly-paid CEO Jeremy Darroch really earn their money.

In such a market advertising is likely to pay a bigger role as a revenue earner. Sky competes aggressively for advertising but it doesn’t actually matter that much. Now it will do – if BT has got its projections right and can lure away a sizeable portion of Sky’s hitherto captive subscription market.

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