Kate Holton and Keith Weir London
BSkyB saw more than £1.5 billion (R24.7bn) wiped off its stock market value yesterday after Rupert Murdoch’s payTV group was beaten at its own game with the loss of Champions League soccer rights.
Shares in the British group, which had previously seen off three major challengers to its dominance of the home movies and sports market, tumbled more than 10 percent after it suffered its first major rights auction loss to once-staid telecoms company BT.
After signing up more than 2 million customers to its three-month-old BT Sport channels, the 168-year-old former state telecoms group said that it had agreed to pay $1.4 billion (R14.5bn) for exclusive live broadcast rights to the UEFA Champions League and Europa League soccer games to add mid-week ties featuring top European teams such as Barcelona, Manchester United and Bayern Munich to the English Premier League matches it already shows.
It’s an “Armageddon scenario in sports rights”, said Claire Enders, the chief executive of researcher Enders Analysis, while also calling it a “case of more money than sense”.
For BSkyB, the loss raises the likelihood it will have to pay more for future content deals, including the next Premier League auction which is expected to be held in 2015 for the three seasons from 2016.
It also leaves BSkyB suddenly looking vulnerable in a market it helped to build.
“It is hard to see how this does not signal a British crossing of the Rubicon and the end of peaceful co-existence in the UK telecom and TV worlds,” analyst Robin Bienenstock at brokerage Bernstein said.
BT, which has spent years slashing costs and cutting staff after two profit warnings in 2008 and 2009, stunned the sporting world last year when it won the rights to show 38 live Premier League matches a season.
While the new entrant to the market remained a minnow in comparison to BSkyB and its 116 games, the move was an early indication of how BT was willing to spend big to protect its core broadband and fibre services by combining it with an offer of high-quality sports programming.
Sky will keep hold of the rights to Formula 1, golf and the most important cricket competitions. – Reuters