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Old 15-04-2013, 00:48   #857
Chad
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Re: ESPN, BT, Euro, Premier and Sky Sports news

BT and Sky kick off pub sports price war

http://www.ft.com/cms/s/0/db41c2b0-a...#axzz2QU52ecqj

BT will significantly undercut the pricing of Sky subscriptions for pubs as the telecoms group attempts to snatch some of the £300m market for its new sports channel launching this summer.

BT will use Sky’s own platform to show its content, which includes Premier League football and rugby, in pubs where annual subscriptions for the much fuller Sky sports package can easily run into five-figure sums.

Sky has already offered some large pub groups heavy discounts of up to 30 per cent, people with knowledge of recent negotiations told the Financial Times.

The offers mark the first time in two decades that the powerful sports rights holder has been willing to give substantial discounts.

Pub and club subscriptions account for between £200m and £300m of BSkyB’s annual revenues, according to analysts. Most of this drops straight down to the company’s pre-tax profit due to the cost of the rights being fixed.

Sarah Simon, media analyst at Berenberg, said: “This is a very vulnerable profit stream because the revenues are so high-margin. Pubs will leap at some competition from BT because Sky increases the price so aggressively every year.”

The head of one pub chain said of Sky: “They have been fiercely arrogant up until now.”

BT is no longer willing to consider a wholesale agreement with Sky to show its pubs sports as part of the wider Sky Sports broadcast, and will sell to pub customers directly on Sky’s own platform over two channels. As part of this strategy, BT will sell subsidised satellite dishes and boxes to pubs and clubs that do not already have the Sky equipment.

BT estimates that about a fifth of pubs do not show any sport, while half only show free sports on terrestrial TV, which represents a key market for the company given its cheaper sports packages. About a third of pubs show Sky Sports.

Bruce Cuthbert, director for commercial customers at BT Sport, said that the service would be “substantially cheaper” than Sky subscriptions, which are based on business rates.

The tariff leaves pubs facing a large subscription bill even if they are not a specialist sports bar. One pub in west London faced an annual bill of £40,000 for a subscription, despite only having two small screens.

Mr Cuthbert said that BT sports would be a “lighter” product to appeal to pubs that want a little extra but not pay for the full Sky package. “There is a market that previously has not had sports,” he said.

A spokeswoman for BSkyB said: “For more than a year now – and pre-dating the purchase by BT of any rights – our strategy has been to extend our reach into a broader range of outlets via additional pricing options, and to deepen our relationships with existing customers with the rollout of WiFi and great events like the forthcoming Ashes Series.”

Last summer, BT paid £738m for the rights to 32 Premier League football games per season for three years in order to bolster its TV service and compete directly with Sky with bundled offers of TV and broadband. It has since acquired the rights to live Premiership rugby matches and WTA live tennis, and is expected to announce several other smaller deals when it launches the service next month.

BT has the first pick of 18 Premier League games – as well as 28 games at Saturday lunchtime, which Mr Cuthbert said would give pubs the chance to create a “regular appointment to view” for their customers. Rugby premiership games will also be shown during the week, he said.
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