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Skyfall: BSkyB Share Price Plunges

Category : News · by | 11 November 2013

sharesBSkyB’s shares took a heavy hit today after the news of BT’s successful bid for the exclusive right to screen live Champions League and Europa League football in a three-year deal (350 fixtures in total), starting from 2015.

Sky’s share price dropped over 10% in one day, wiping around £1.5 billion from its stock market value. According to Reuters, this leaves the company suddenly looking vulnerable in a market that it helped to build (and monopolise).

But the warning signs were there to see last year when BT won the rights to show 38 live Premier League matches a season, leading some to suggest that Sky massively underestimated the significant threat of its main competitor.

Sky previously paid £2.28 billion for the right to screen 116 live English Premier League football matches last year. The latest battle suggests that such content will attract even larger bids next time around.

BT’s victory might see viewers and Internet users making a switch and this could in turn also have a serious knock-on effect on Sky’s ability to attract and keep broadband subscribers – an area it is extremely keen on expanding.

“These were the crown jewels properties for Sky. I’m sure they’ll be kicking themselves today. I feel for them obviously, but they got it wrong.”
BT Consumer Chief Executive, John Petter.

This latest setback for Sky, combined with the growing threat of online streaming video suppliers like Netflix, leaves the current BSkyB business model looking a bit shaky.

And it also raises the following question: can Sky bounce back from the BT defeat?

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(1) Comment

Jonathan
11 months ago · Reply

Interesting to note Sky’s unconvincing dismissal of BT’s victory. The Financial Times stated in an article (“TV boot on the other foot for Murdochs”) that Sky had made a last minute attempt to contact UEFA when they heard that rival BT had entered into negotiations for TV rights to the competition.

“It then made several phone calls to Uefa, European football’s governing body, in the hope that it could stitch together its own deal. Yet ultimately Sky was unable or unwilling to break back into the process.”

The article goes on to say that consumers are now paying for the increase in cost in sport rights: “Since 2007, the price of Sky TV and sports package has increased nearly 18 per cent, or £78 per year.”

The FT article can be viewed here: http://www.ft.com/cms/s/0/941dfbd0-4afc-11e3-ac3d-00144feabdc0.html

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