One-time British monopoly phone provider BT (British Telecom as was) took a huge gamble a couple of years ago by entering the pay-TV sports market, taking on BSkyB which had enjoyed a virtual monopoly having seen off smaller rivals such as Irish-owned Setanta.
BT, anxious to stem the loss of broadband subscribers, to Sky and others, paid £900m for a package of Premier League matches and has subsequently hoovered up exclusive rights to Champion’s and Europa League games. Leaving Sky, which still has most of the Premier League games, in a rather large hole.
The big question for BT to answer was: would the new strategy work by keeping and adding customers (premium broadband customers get the sport free) or savage its profits for little volume gain?
Well BT has just announced its numbers for the last quarter of 2013 and revenue is up six per cent to £4.6bn (Sky took £1.9bn in the same period) and profits before tax by an impressive eight per cent to £617m with more than 2.5m sports customers.
So it looks like a win for BT. What will Sky do next?
BT is a much bigger company so it’s hard to see how Sky can return to the fray and outbid it to win back lost sports rights in the next Premier League auction. Indeed it may lose more games. And letting go of the Champion’s League rights without too much of a fight looks like a huge mistake.
Will uncle Rupert Murdoch, a 39 per cent shareholder in BSkyB, whose News Corp. tried to buy the rest before the phone hacking scandal intervened, re-enter the fray? All of a sudden Sky looks like it needs an ally with deep pockets.