BSkyB’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?
BSkyB Profits Hit By Cost Of Premier League Deal – Pre-tax Profits Fall 18% by Mark Sweney (The Guardian, 30 January 2014)