Champions League TV deal in focus

Barcelona's Lionel Messi leaves the pitch after a Champions League game, followed by a cameraman From 2015 European action featuring the likes of Messi can only be seen on BT

The football and broadcast worlds are still digesting the impact of BT Sport's decision to pay close to £900m for the exclusive broadcast rights to Champions League and Europa League football matches.

The broadcaster has won the rights to show all 350 fixtures each season, for three years from 2015.

The new contract, priced at £299m a season, is worth more than double the current arrangement, and could mean significantly more money for UK clubs in the two European competitions.

But what does it mean for the sporting and business ambitions of BT Sport, as well as Sky and ITV, the current rights holders?

Here Kevin McCullagh, deputy editor of industry publication TV Sports Markets, offers his opinion on where it has left the three broadcast players.

BT SPORT

"What this deal really does is provide another sign that BT really is a different proposition from Sky's previous and most recent competitors in the pay football market - Setanta and ESPN.

"The size of this deal and the fact it is such an exclusive deal for such a major competition like the Champions League makes it far different from anything those others managed.

"And the amount of money BT has put on the table is of a totally different order that what we have seen before. It shows BT has the financial resources, but also the stomach, for a battle with Sky.

Scotland manager Gordon Strachan (centre) and other BT Sport TV guests BT Sport pundits filmed discussing the Partick Thistle v Dundee United game

"They clearly see televised sport as a very expensive and long-term play. But have they paid too much? That is the huge question.

"BT really needed to spend big money to get a toehold in a market dominated by Sky.

"It is also worthwhile remembering BT launched its sports channels as a means of remaining a major triple-play player - that is, a provider of TV, internet and telephone services.

Start Quote

BT is making a very decisive move for TV rights that are super premium”

End Quote Claire Enders Enders Analysis

"Before the launch of the sport channels, Sky was really making inroads and taking away BT broadband customers. The £900m is not only to add more sports TV subscribers, but to protect their broadband base, which is a much bigger business.

"If BT is still the biggest triple player in 10 to 15 years, they will look back and see this period - and Champions League expenditure - as being worthwhile.

"And by offering their sports products to their broadband subscribers, they are also positioning themselves as the choice for the budget-conscious fan.

"They haven't announced their plans yet for the free-to-air games they will show. They don't have a free-to-air channel and I can't see them launching one.

"So their options are: a) to un-encrypt their pay TV channels during these matches, or b) sub-license on to a free-to-air partner such as BBC or ITV.

"The best thing for BT would be to keep everything on their channels. This allows them to put out the strong marketing message of BT being the only place to watch Champions League/Europa League football."

SKY

"It is a massive blow for Sky. The importance of the Champions League should not be underestimated, nor what a major TV sports rights property it is in the UK.

"It is probably the biggest sporting rights auction Sky has lost.

Sky Sports presenter Tim Abraham talks to camera during day one of the 3rd Investec Ashes Test match between England and Australia Sky's Tim Abraham on camera before an England v Australia Test cricket match

"It is the second biggest subscriber driver after the Premier League, and Sky will feel the impact of this.

"However, Sky has still has a top portfolio, and has got other major sports rights, as well as a broader offering than BT.

"It has a really wide sports offering - including exclusivity to half of the Formula 1 races, England and Wales cricket, La Liga top flight Spanish football, and a major range of golf events.

Start Quote

Did BSkyB break the habits of its entire existence and foolishly bid too little? ”

End Quote Robert Peston BBC Business editor

"This announcement has come as Sky is pouring money into other areas, for example original British drama.

"By offering an increasing breadth of content, Sky is looking to give people other reasons to buy Sky subscriptions, rather than BT's.

"Going back to sport, I don't think that there is anything very obvious that Sky can go out and buy right now to replace the Champions League rights.

"I think they will look to weaken BT Sport when it comes to the next round of Premier League TV rights in England.

"Sky currently has 118 live games a season compared with BT's 38 a season.

"But where BT has done better than Setanta or ESPN is in the number of "first picks" broadcast choices - BT managed to win 18 games, whereas their predecessors got none.

"I think Sky will be looking next time round to reduce BT's number of first picks."

ITV

"This will have hit ITV too, as over the decades they have become the terrestrial television home of Champions League football. They have also been showing the Europa League on ITV4.

ITV loses its Champions League rights after 2015 ITV's panel of experts discuss Real Sociedad v Manchester United

"With BT grabbing the Champions League rights, it means that ITV loses its top televised football competition. although they do have live England internationals, which attract strong viewing figures.

"But, having lost the FA Cup to the BBC, ITV now has no top-level live club football.

Start Quote

"What has happened to ITV is being seen around the world, where big global TV sports rights are migrating to pay-TV”

End Quote Kevin McCullagh TV Sports Markets

"The upside is that the CL and EL were expensive and this has freed up a large chunk of budget that they can spend on other content. They will have roughly £50m a year available to spend that is currently going on Champions League football rights.

"They may need to invest in midweek evening content for young men.

"But, again as with Sky, there is not a lot of available football or other sports rights out there to replace the Champions League.

"What has happened to ITV is being seen around the world, where the big global TV sports rights are all migrating to pay-TV.

"It is the most compelling way to bring people on board as pay-subscribers.

"I am talking about seasonal-long events, such as the Premier League or Champions League, where you have a series of games and can build interest and a following over a year (rather than a World Cup or Olympic Games).

"As a result we are seeing a growth in value in top sporting TV rights."

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    09:39: Market data

    Some of you have emailed in about the BBC's market data pages, which are displaying old numbers this morning. There are some problems with the facility, but our software engineers are working on getting it up-and-running as soon as possible. Sincere apologies.

     
  2.  
    09:26: L'Ocittane flourishes
    L'Occitane

    French beauty products firm L'Occitane, which is actually headquartered in Luxembourg, reports a staggering 200% rise in pre-tax profits for the six months to the end of September. The firm made €40.3m, compared with €13.3m in the same period last year. However net sales are up just 9%, so the boost in profits is largely due to other factors, such as favourable currency exchange rates.

     
  3.  
    09:15: Telefonica to sell O2
    The logo of O2 Deutschland,

    Spain's Telefonica is in talks to sell its UK mobile operator O2 to BT according to Spanish website El Confidencial. The deal would see Telefonica receive a 20% stake in BT as part of a "strategic alliance" to strengthen the pair, it says. Neither BT nor Telefonica have commented on the report thus far.

     
  4.  
    08:53: Intesa bid for Coutts
    Private Bank Coutts Logo

    The Financial Times reports Italian bank Intesa Sanpaolo is eying a bid for the Queen's bank, Coutts. Royal Bank of Scotland (RBS) owns Coutts, but last month it put the international arm of the bank up for sale. Intesa is cash rich with €16bn of excess capital sitting on its balance sheet, so it is looking to make acquisitions. It is, however, trying to convince RBS to sell its highly prized UK business as well, according to the FT.

     
  5.  
    08:28: Markets update

    London's leading share index - the FTSE 100 - is down 0.1% in early trading, dragged down by Aviva, and further falls for major mining companies - including Rio Tinto, Anglo American, Antofagasta and BHP Billiton.

    The detailed outlook on the main European markets is as follows:

    • The FTSE 100 is down 0.11% at 6,743
    • In Frankfurt, the Dax is down 0.1% 9,722
    • In Paris, the Cac is up 0.07% at 4,350
     
  6.  
    08:20: Aviva shares lower

    It seems investors aren't all that impressed with the Aviva takeover of Friends Life. Shares in the UK insurance giant are down 3.5% at 519p.

     
  7.  
    08:17: Petrofac outlook

    Investors are really unhappy with Petrofac's downgraded profits outlook (see 07:49). Shares are down a whopping 20% in early trading. They are currently priced at 951.36p after opening at 996.50p.

     
  8.  
    08:13: Aviva/Friends Life deal BBC Radio 4

    "I think predominately its a financial transaction from an Aviva perspective," David Cumming, head of equities at Standard Life, tells Today. He's talking about the proposed merger between Friends Life and the UK insurance giant. He says Aviva has seen an opportunity to make money and cut costs through the deal. Friends worked out the government's reforms of pensions put it in a weak position in the annuities market, which had been responsible for a lot of recent growth, he adds.

     
  9.  
    08:06: Sanctions hit Russia

    Russia is losing $40bn a year due to economic sanctions imposed by Western governments in response to the Ukraine crisis, and up to $100bn a year because of falling oil prices, the country's finance minister, Anton Siluanov, has said.

     
  10.  
    08:00: Spanish bonds
    Spanish Bonds

    Investors seem happy with the strident tone taken by Mario Draghi, the president of the European Central Bank, on battling deflation in the eurozone. The yield on Spanish 10-year bonds have fallen below 2% for the first time - although they have been dropping steadily all year, as the chart above shows.

     
  11.  
    07:49: Petrofac outlook
    Petrofac

    The effects of falling oil prices are being felt at oil and gas giant Petrofac. The company says it expects a $500m net profit in 2015 - much lower than analysts' estimates. "The foundations of the business remain strong," insists chief executive Ayman Asfari.

     
  12.  
    07:34: Insurance company restrictions

    Insurance companies in the UK will be banned from covering the cost of terrorist ransoms, under new anti-terror legislation to be announced by the home secretary, Theresa May, later today. The government says paying ransoms encourages kidnapping and it says Islamic State militants are taking hostages to fund their operations.

     
  13.  
    Via Twitter Adam Parsons Business Correspondent

    tweets: "Turns out @LewisHamilton DOES still have TWO allocated parking spaces at Asda Stevenage. But the paint's faded a bit..."

     
  14.  
    07:15: Europe exit call BBC Radio 4
    Owen Paterson

    Former environment secretary, Owen Paterson, is to call on the prime minister to renegotiate the UK's membership of the common agricultural policy and negotiate a new free trade agreement with the European Union. He will tell business leaders the UK could flourish economically outside the EU. He is also expected to call on the government to give two year's notice of its intention to quit the EU.

     
  15.  
    07:00: Royal Bank of Scotland BBC Radio 4
    RBS

    Late on Friday, Royal Bank of Scotland (RBS) shares fell 4% after it admitted it had overstated its financial strength as part of the European Central Bank's stress tests. David Cumming, head of UK equities at Standard Life, tells the Today programme that "it's an embarrassing mistake". But, he adds: "Ironically, RBS has one of the best capital ratio positions of the UK banks now, so there's nothing from a customers point of view to worry about".

     
  16.  
    06:50: Food producers' woes Radio 5 live

    It's like "removing nutrients from a plant," says Mr Swift of the squeeze on food producers. "Ultimately it will wither, and it may well die". He says the pressure on their profit margins leaves the firms "less able to deal with shocks." It is not the fixed prices for their goods that is hurting, he says, but the demand by supermarkets for suppliers to contribute to the cost of in-store advertising, promotions, or even refurbishment.

     
  17.  
    06:41: Food producers' woes Radio 5 live

    Duncan Swift, who works for the accountants behind the food producers report, Moore Stephens - tells Wake Up to Money that the supermarkets are "removing the blanket" of money that allows food suppliers to pay their own suppliers, and to pay their staff a decent wage. It also means that food producers have no money to invest in new products, he says.

     
  18.  
    06:39: Chinese interest rates
    China

    China's leadership and central bank are ready to cut interest rates again and loosen lending restrictions, over concerns that falling prices could trigger a surge in debt defaults, business failures and job losses, according to a report from Reuters. The People's Bank of China is also open to the idea of cutting the banking industry's reserve requirement ratio (RRR), which effectively restricts the amount of money available to fund loans.

     
  19.  
    06:24: Food producers' woes

    There's no doubt that customers are winning in the supermarkets' price war, which is pushing prices ever lower, but one industry is really feeling the pinch. A record number of small food suppliers are going out of business, according to a large accountancy firm, because big retailers are pressurising them to sell their wares more cheaply, which is eating into their profit margins.

     
  20.  
    06:14: Lewis Hamilton Radio 5 live
    Lewis Hamilton

    Our colleagues at Wake Up to Money have managed to find a business-related Lewis Hamilton anecdote. Apparently, the double F1 world champion (as of this weekend), was once awarded with a dedicated parking space at his local Asda supermarket.

     
  21.  
    06:03: Asian markets
    China central bank

    Asia's main markets are all up this morning, buoyed by Friday's unexpected rate cut by China's central bank, which has sparked hopes of more action to combat the country's slowing economy. The European Central Bank's vow to fight deflation has also brought cheer to investors. The Hang Seng is up almost 2% at 23,898.34 and the Shanghai Composite is up 2.2% at 2,541.54. The Nikkei is closed for a public holiday.

     
  22.  
    06:01: Matthew West Business Reporter

    Morning folks. As always you can get in touch via email to bizlivepage@bbc.co.uk and on Twitter @bbcbusiness.

     
  23.  
    06:01: Joe Miller Business Reporter

    Morning. There's a lot of news around today, but lets start with the Royal Bank of Scotland. The bank - still 80% owned by the taxpayer - has apologised for repeatedly giving incorrect evidence to a parliamentary hearing. The evidence concerned its controversial Global Restructuring Group, which handles the bank's loans to companies considered to be a possible risk. It was accused of killing off viable businesses.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.