When the group stages of the Champions League kick off next week, anyone turning to ITV to catch a game will be disappointed.
This season’s top European club tournament (and its little brother, the Europa League) will only air on BT Sport after BT paid almost £900m for exclusive rights over three seasons, more than double the £400m Sky and ITV had paid for shared rights for the previous three years.
Along with a successful bid for 38 Premier League games a year in 2012, that deal was a clear signal BT intended to challenge Sky’s dominance of the pay TV market. A grab for sports rights and a rebranding of its underperforming BT Vision service as BT TV has left BT with a strong line-up of sports programming and, as of last month, an exclusive US drama channel. It has all been driven by a desire to protect BT’s core business – broadband – when telecoms and TV are becoming increasingly intertwined.
“Half of UK homes are choosing to buy their broadband bundled with TV services and sport is a particularly strong driver for a number of those homes,” says BT TV and Sport managing director Delia Bushell. “Drama and entertainment equally have broad appeal.”
“You look at BT and think they are doing this to prop up their broadband business,” says Enders Analysis’ Michael Underhill. “They have looked at their subscriber numbers and said ‘We’re seeing a huge flow of broadband subscribers to Sky, so how can we stem this? Let’s invest a whole bunch of cash in sports TV’.”
The sports rights have so far sucked up most of BT’s investment, going beyond football into rugby union, Moto GP and, with the acquisition last month of rights to Ashes Tests played in Australia, international cricket.
What makes BT different from previous challengers to Sky, such as Irish sports broadcaster Setanta and Disney-owned ESPN, says Underhill, is that it has more money to spend and more to lose in the UK market. If BT’s spending shows how serious it is about challenging Sky, the £5.4bn Premier League deal signed in February shows just how committed Sky is to retaining its position as the UK’s main pay-TV player. Sky paid £4.2bn for 126 games a year (10 more than under the previous deal). That was almost double what it paid for the previous three seasons. BT paid £960m for 42, up from 38. From 2016, Sky and BT will between them spend more to televise one season of Premier League football than the BBC spends annually on all its hours of TV programming.
Sky’s chief marketing and digital officer Stephen van Rooyen says the deal was a good one. “The Premier League auction was a great result for Sky. It’s not just about having three times more matches than BT. We’ve got even more first picks and we think Friday night football is going to be a big addition to our schedule.”
While most of BT’s investment has gone on sport, its launch of a version of US cable channel AMC last month is the clearest sign yet it wants to compete on a broader basis. Last Monday BT showed the first episode of zombie survival drama Fear the Walking Dead, a spin-off of one of AMC’s most popular shows, on its free-to-air Showcase channel. The premiere received just under 300,000 viewers in the first 48 hours after it aired. BT says it is happy with the figure, but the numbers are unlikely to give Sky any sleepless nights. Subsequent episodes will only be available on the AMC channel.
Sky has a huge lead in high-value drama. BT’S AMC is an attempt to match Sky Atlantic, the channel that is effectively a UK version of HBO, the US home of some of the most high-profile shows including Game of Thrones. Sky has also begun broadcasting original big-budget dramas commissioned exclusively for its channels, such as Fortitude earlier this year and Last of the Panthers, which airs in November.
BT says it hasn’t got any immediate plans to begin commissioning its own content – it didn’t even consider bidding for the services of former Top Gear presenters Jeremy Clarkson, Richard Hammond and James May – but Bushell says the AMC deal has “triggered a lot of approaches” from people and companies pitching shows. The time it takes to get original commissions up and running means a drama portfolio to match Sky’s can’t be assembled speedily. “It’s not an area where we see strong competition from BT today and it takes time and investment to build a strong position,” says van Rooyen.
Two years into its push, BT’s pay-TV business remains small with 1.2 million subscribers and the total audience for BT Sport only rises to 5.2 million once direct subscriptions through Sky and a wholesale deal with Virgin are included. It also appears to have had negligible impact on Sky, which has just passed the 12 million subscriber mark.
Bushell, a long-serving Sky executive before joining BT last year, claims the rivalry between the two companies is overplayed. BT, she says, sits somewhere in the middle of a pay-TV market with a “full fat” Sky at the top and cheaper “pay-TV lite” services such as Netflix at the bottom. Yet the frustration she conveys at taking on a company in such a strong position suggests more conflict than either she or Sky are prepared to admit. “We find Sky’s dominance quite hard to compete with,” she says. “It’s quite challenging for any new player to come in.”
BT has reason to persevere, however. In December it announced a proposed £12.5bn takeover of the UK’s largest mobile operator, EE, and just two months later Sky said it would launch its own mobile service on O2’s network. As the value of signing up each household to a bundle of services increases, both companies will keep throwing as much as they can at our TV screens.
Sky Sports’ key rights
Premier League – 116 games
Football League – 127 games
La Liga – over 300 games
RFU England autumn internationals – 3 games
Ireland autumn internationals – 2 games
European Champions Cup and European Challenge Cup – at least 40 matches
ECB England home tests – 7
ODIs + International T20 – 17
ICC Cricket World Cup – every game
50 county matches
• Formula 1:
BT Sport’s key rights
Premier League – 38 games
Champions League and Europa League – 351 games
500 games from France, Germany, Italy, Portugal and Switzerland
Up to 69 matches from Aviva Premiership Rugby
34 games in the European Rugby Champions Cup
All Australian home cricket internationals including Ashes from 2016
• Moto GP: