BSkyB Dominates Soccer Rights Auction, BT Pushes Out ESPN
06/13/2012| 02:47pm US/Eastern
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-- BSkyB pays GBP2.28 billion for 116 games
-- BT pays GBP738 million for 38 matches
-- ESPN not awarded any games
-- Price for all games spirals to GBP3.02 billion, from GBP1.78 billion
By Carolyn Henson and Marietta Cauchi
British Sky Broadcasting Group PLC (>> British Sky Broadcasting Group plc) and BT Group PLC (BTY.LN) Wednesday emerged as the big winners in the high stakes competition to broadcast live matches from the U.K.'s top soccer league, as Walt Disney Co.'s (>> The Walt Disney Company) entertainment and sports network ESPN suffered a setback by failing to win any rights to show games.
The U.S. company had been expected to win more games than the 23 live matches it won last time round, but instead the auction saw BT win rights to show English Premier League games for the first time. BSkyB continued to dominate the auction, as it has done for the past 20 years, but increased competition pushed the cost to broadcasters up by 41%.
The price for all the live games available to be broadcast over the three seasons starting in 2013 was GBP3.02 billion, from GBP1.78 billion at the last auction. BSkyB Paid GBP2.28 billion for 116 live games, up from GBP1.62 billion for the 115 matches it won in the last auction, while BT paid GBP738 million for 38 matches including the opening game of each season.
News Corp. (NWS) is BSkyB's biggest shareholder with a 39.1% stake. News Corp. also owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.
The Premier League is the U.K's top soccer competition contested by the nation's 20 leading clubs over a season that runs from August to May. Its attraction extends far beyond the U.K, with matches watched by an estimated 4.7 billion people in more than 200 countries. Its popularity has increased as the wealth of clubs has risen, enabling them to lure top foreign players. Still, spiralling wages and transfer fees for players have left some clubs struggling to balance their books, and such a steep increase in the price of the live TV rights will come as a relief. The total price of the live games rose just 4% at the last auction, and the increase this time is well above the 10% to 20% increase media analysts expected.
The broadcasting rights are the lifeblood of BSkyB, whose financial success relies largely on its ability to lure customers through its live coverage of the Premier League on its Sky Sports channels. At the end of March, it had 10.6 million household subscribers and also charges U.K. pub owners thousands of pounds each year to show Sky's match broadcasts.
"Whilst the cost is higher, we have capacity for this increase through the combination of excellent work on cost efficiency across the business and choices over other future spending," Jeremy Darroch, BSkyB's chief executive, said in a statement. "As a result, we remain confident of delivering our financial plans, in line with our expectations, unchanged, in each year of the new deal."
BT in recent years has been expanding away from its fixed-line telephony background and now offers packages including phone, broadband and TV. However, it doesn't have its own TV channels, instead taking its TV offering from other broadcasters, and so winning rights marks a move into providing entertainment. The company said it will launch a new soccer-focused channel to carry the games.
"BT is already investing GBP2.5 billion in fibre broadband. Securing Premier League rights fits naturally with this, as consumers increasingly want to buy their broadband and entertainment services from a single provider," Chief Executive Ian Livingston said in a statement.
A spokesman for ESPN said it had "made a strong bid that reflected the value of the rights to our business."
The company still has the rights to show Premier League matches in the U.S. next season, but it's not clear how the setback in the U.K. will impact ESPN's ability to regain those U.S. rights at an upcoming auction.
-Write to Carolyn Henson carolyn.henson@dowjones.com
(William Launder and Lilly Vitorovich contributed to this article.)
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