The chief executive of BT has said that rampant inflation in the prices paid for TV sports rights must come to an end, as the telecoms giant takes on rival Sky in the £1bn-plus battle for Champions League football.
First-round bids for Champions League rights are understood to have been submitted this week, with governing body Uefa aiming for an up to 30% increase from the new deal, to as much as £1.2bn. BT paid £900m to poach the exclusive rights from Sky under the existing deal.
Ahead of a decision on the next three-year deal, which could be announced as soon as next week, BT chief Gavin Patterson said that “rampant inflation in sports rights” has to end.
Patterson, who has been dealing with the fallout from a huge accounting scandal that has cost the company more than £500m to date, said that a limited period of inflation was expected after BT drove a 70% rise in the value of the Premier League rights when it won a large slice of rights previously held by Sky to launch BT Sport in 2012.
Speaking at the annual Enders Analysis conference in London, the BT boss insisted uncontrolled increases in prices could not carry on. “Naturally when we came in [to the market] there would [always be] be some inflation. At some point it will stabilise … The sport market is pretty saturated in terms of viewers and consumption today. I do hope at some point in the future we can find a stable equilibrium.”
The Champions League is considered to be a critical litmus test as to whether price inflation will continue at such high rates.
To date both Sky and BT have attempted to play down expectations of a bidding war. But in January John Petter, chief executive of BT’s consumer division that runs BT Sport, accused Sky of having too much dominance of sports rights and said that BT’s preference was to keep the Champions League.
Patterson appeared to play down BT’s appetite for an at-any-cost bidding war for the Champions League, saying that the company did not necessarily need to regain exclusive broadcast rightsto achieve its aims.
“We don’t need to be number one in the sports market, but we do need to be a viable number two,” he said.
BT is understood to have held talks with potential free-to-air partners. Channel 4 in particular has been named as a potential partner. Champions League sponsors have expressed concerns to Uefa about the lack of exposure under the current BT deal. Previously the rights had been split between Sky and ITV.
Several observers say that Sky, which is the subject of an £11.7bn takeover by Rupert Murdoch’s 21st Century Fox, does not appear to have the appetite to lodge a blockbuster bid for Champions League football.
They say that Sky could be keeping its powder dry to make sure it can secure the lion’s share of the crown jewel Premier League rights when the next three-year deal is struck. Furious competition between BT and Sky saw the Premier League secure an enormous £5.14bn deal last time.
Sky may also be wary of the public relations impact of mounting knockout bids for both Champions League and Premier League rights if Fox’s deal to take 100% control of the pay-TV company is cleared by competition regulators and the UK government.
Rival broadcasters opposed to Fox’s proposed takeover are preparing to lodge complaints with regulators in the UK and Europe after expressing concerns that the pay-TV broadcaster will dominate bidding for top-flight sport, TV shows and movies.
James Murdoch, chief executive of 21st Century Fox, said that a combined Fox/Sky, which would own operations in the UK, Germany and Italy, would not look to push out rivals for premium sports rights.
“It isn’t really about muscle – it is about trying to find what is the right balance for sports leagues to maximise returns and increase the quality of play,” he said. “Rightsholders dictate terms of how they are going to auction or licence their product. It is not a question of leverage and muscle.”
The culture secretary, Karen Bradley, is expected to start a 10-day assessment of the deal next week to see if it warrants asking Ofcom, the media regulator, to look at concerns such as media plurality.