four reasons why BT can tackle Sky Sports

Jake Humphrey quits BBC sport.

So far in their bid to become a true challenger to Sky Sports, BT Vision seem to have been following the ESPN playbook very closely.  First grab some Premier League Football, then some Premiership Rugby and finally poach a BBC sports presenter.  Ray Stubs was ESPN's choice and F1 presenter, Jake Humphrey is joining BT's big adventure.

So how can BT succeed in the UK's sports television market, where a growing list of companies: BSB, ITV Digital, Setanta and now ESPN, have failed?  Whilst it is extremely unlikely BT could ever topple Sky as the UK's top commercial sports broadcaster, here are four reasons why BT may be able to emerge as a credible competitor.

1. BT is big and it can do Triple Play
The biggest problems that the last two competitors to tackle Sky had, was that they didn't have a pre-existing customer base; and they were only sports channels, and therefore could only charge viewers about £10 a month.  BT has a massive customer base to sell sports content to.  To avoid the second problem BT will look to the Sky.  Throughout its history, Sky has always bundled its sports together with other content and services.  Therefore to get Sky Sports you must buy its entertainment channels, meaning each customer pays at least £42 a month.  There are also bundles which include phone, broadband and TV (triple play).  Including movies, HD, phone line rental and a Sky box on a second television, the total cost of a domestic Sky package can exceed £100.  Naturally it is the Sky model that BT will follow, chucking its sports channel into a home television and communications package. 

2. BT has bigger games than ESPN or Setanta, ever had
All of Sky's previous challengers have suffered from having a poorer selection of games than Sky.  In its Premier League deal BT has managed to pick up 18 "first pick" matches; 13 of these will be on Saturdays at 12.45pm - the remainder midweek. Sky still have the 20 first picks for their Super Sunday 4pm slot, and Sky get to pick those first.  But thanks to the UEFA Champions League (UCL), BT should get some attractive games.  If a team is playing in the UCL on a Tuesday, then Sky wouldn't be able to pick it for its first pick Sunday slot. 

3.  BT is, at last, investing in content.
After years of trying to get regulators to tackle Sky's dominance in the pay television market, BT has finally adopted another strategy and invested big in content.  It is rumored that BT put £2bn on the table (over 3 years) in the first round of the Premier League bidding process, and was the leading bidder for most of the seven packages of games.  It was only when Sky dug really deep (paying £2.28bn for 5 packages), that they won the lion's share of the matches.  This tells us that BT is rather ambitious and maybe has another £1.25bn to invest in sports rights.  £152m of this has just been spent on securing top flight English club rugby union, in its entirety, from Sky/ESPN.  Where else may BT look to expand its portfolio?   The simplest (and increasingly likely) move may be to acquire the UK operations of ESPN, which would instantly net BT some more football rights (Europa League 3rd/4th pick, FA Cup 2nd/3rd/5th pick, Serie A) and give Jake something to do between next January and August.  There is also the current tender process for UEFA's new "Week of Football" format for international qualification (explained below).  In two years the UK UCL rights are re-tendered.  Expect BT to fight hard for those UCL rights that are currently held by Sky.

4.  Sky overpaid for the Premier League rights
There is no doubt that the success of Sky is due to the Premier League.  For twenty-one seasons it has combined premium football, with quality production values and built one of the worlds most successful pay television broadcasters.  But the recent battle for Premier League football proved once and for all, that Sky is so dependent on PL football, it couldn't possibly contemplate life without it.  And this is despite some recent impressive innovations like Sky Atlantic, and heavy investment in original comedy & drama.  In 2009 Sky paid £1.623bn (over 3 years);  they are now paying over £600m more than that.  It is very unlikely that subscriber growth will cover this increase.  Subscription prices will rise, but Sky have said this money will be found through efficiencies.  So expect Sky's £1bn marketing budget to be cut, fewer tv shows/movies and the loss of a few sports contracts.  Now, I wonder who might be interested in picking up those?



UEFA's "The Week of Football" explained...
From 2014, the 53 football associations that comprise UEFA will sell the rights to World Cup/EURO qualifiers on a collective basis.  These internationals will be played as double headers over a six day period (Thurs-Tues), creating "The Week of Football".  The double headers will be played on either Thursdays and Sundays, Fridays and Mondays, or Saturdays and Tuesdays.  Every game will be shown in every nation.  The August friendly date has been axed, and the November and March friendly dates are combined into one double-header.