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BT Ponders Sale of TV Sport Broadcasting to Aid UK Broadband UPDATE

Thursday, April 29th, 2021 (7:55 am) - Score 5,256
bt_sport_studio_picture

Telecoms giant BT, which is currently doing everything it can to fund Openreach’s planned £12bn rollout of “full fibre” (FTTP) broadband services to 20 million UK premises by the mid to late 2020s, has reportedly appointed investment bank Lazard and held tentative early talks with a view to selling their BTSport broadcasting biz.

The addition of BT’s sport business to their portfolio has always been somewhat of a contentious one, not least due to the high cost of broadcast rights and the challenge of trying to unseat established rivals like Sky. At the same time many consumers have tended to express the view that the operator might have done better to invest in their broadband infrastructure instead, which is finally happening.

NOTE: Openreach’s gigabit-capable Fibre-to-the-Premises (FTTP) network is currently available to 4.5 million UK premises, growing at a rate of c.42,000 per week.

Furthermore, the operator’s mobile division EE also has to consider the heavy costs involved with deploying the latest ultrafast 5G mobile (mobile broadband) technology across the United Kingdom, as well as the c.£500m hit they’re taking from having to remove and replace Huawei’s kit within their network. We should add that the COVID-19 crisis hasn’t exactly done wonders for the live TV sport business either.

On top of that consumers today often feel as if they now have to pay significantly more, usually to several providers, in order to secure the full range of coverage. So on the one hand BT’s move into sport might have made the market more competitive at a certain level, but on the other hand that fragmentation hasn’t necessarily aided the price of entry for customers who demand the most coverage.

According to the FT (paywall) and various other reports, BT has already held some very early talks with companies including Dazn, Amazon and Walt Disney, as well as various private equity firms. Such a deal could come in various different forms, such as the complete disposal of BT Sport, a Joint Venture (JV) / partnership or the sale of a stake in order to boost investment.

BT has already sunk billions into the venture, so it stands to reason that they’d probably want to retain some control or influence over the broadcasting side going forwards. Meanwhile, the Football Premier League is said to be close to renewing its £4.7bn domestic broadcast contracts with Sky (Sky Broadband), BT and Amazon – due to the pandemic, they seem to be skipping the usual auction process this time.

However, this isn’t the only avenue that BT are examining to help fund their infrastructure plans. The operator has also been busy cutting thousands of jobs (except for engineers), which has left them exposed to the potential of a national strike (here and here). In addition, BT’s CEO, Philip Jansen, remains “open minded” about the possibility of selling a “minority” in Openreach (here).

UPDATE 8:51am

BT has just issued a statement.

A BT Spokesperson said:

“Further to media reports, BT can confirm that early discussions are being held with a number of select strategic partners, to explore ways to generate investment, strengthen our sports business, and help take it to the next stage in its growth. The discussions are confidential and may or may not lead to an outcome.”

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
28 Responses
  1. Carl says:

    Absolute guess that Virgin Media may take this, to improve their tv offering, and link it in with the O2 merger as a benefit to customers.

    1. Mark Jackson says:

      I have my doubts about that idea. Virgin Media have tended to avoid that depth of involvement with sport content creation, and they have bigger challenges to tackle.

    2. Anton Williams says:

      Any company thinking of taking this Sports channel on must have very deep pockets and a endless supply of cheque books!

  2. Ollie says:

    Yes this will be picked up by Amazon or Disney is my guess. Probably a good short term move for BT but long term they either need to invest and grow or soon the rest of the business will be sold as well.

    Without the sport bundles there will be a lot of broadband customers that will switch.

    1. a welshman says:

      they have moved to now tv rather than having their own line up to save a bit of money but i think they have lost customers too

    2. DaveIsRight says:

      Dazn is the sports whale here. They have incredibly deep pockets and are massively keen to break into the UK more widely. They’ve just inked a 1Bn+ 5 year deal with Matchroom Boxing as a sign that they’re gunning for Sky’s traditional strongholds and they have every bit of the money to match them. Personally I’m hoping they do. If the Premiere League don’t go to auction it’s even more incentive for Dazn to make a play as it’s the only way they’re going to get a slice of that pie.

  3. CeredigionMan says:

    They have got themselves into a bit of a dilemma, with years of neglect of their core business and now trying to play catch up while loosing out to other ISP who are willing and prepared to install FTTP.

    Where have you been OpenReach?

    1. A_Builder says:

      Well there is also the cost of content and the way content creation origination / content purchase is done is changing.

      Look at Disney: they own a huge back catalogue of content so Disney+ real offer that has little cost to roll on.

      Look at Netflix, they do create a lot of content but all the old stuff they have to buy/license which costs a huge chunk of change. But they have a level of mass that BT don’t and never will have.

      BT cannot compete with the levels of spend these guys have. Anchoring the whole of BT TV around Sport was always a quick transient fix. And an expensive one at that.

      QUAD play was a term thrown around by the children in red braces who run banks in the City. I have no idea why anyone thought was a good idea. Nobody could every explain a coherent long term strategy for QUAD play to me. In both VM and BT’s cased the QUAD play story smelled more of a diversionary tactic to avoid too much focus on lack of network investment. However, one a term is thrown around in those circles it become the key punctuation to sentences and if you fail to use it: you fail!

    2. Fastman says:

      ceidiogeion man

      spending about 5bn since 2011 on fibre broadband which is about 4.5bn more than any one else

    3. Fastman says:

      A builder Quad play is really simple and easy — once you get all 4 bits of the quad you keep all 4 (people only churn bits) –so not sure what bit of that you did not not understand

    4. Squidgy says:

      THe problem with quad play is that it doesn’t really benefit the provider. They have to heavily discount the overall package to make it attractive then keep on giving discounts to prevent overwhelming churn. The added problem for BT is that their TV is offering is just a one trick pony and the rest of the content is mediocre . The hardware has always been 2nd rate, at best. The new as yet unrealised BTTV box maybe a big improvement but possibly too little to late.

    5. A_Builder says:

      @Fastman

      That is not a discernable business strategy.

      It is a customer retention strategy.

      Nobody ever made a case for how it made financial sense.

    6. GNewton says:

      @Fastman: “spending about 5bn since 2011 on fibre broadband which is about 4.5bn more than any one else”

      Your constantly defending BT is admirable, but doesn’t tell the whole story. BT already had near nationwide coverage with regards to telecom poles, ducts, exchanges etc, and is many times bigger than the fibre altnet startups combined. According to the Independent Networks Cooperative Association (INCA) a calculated commitment of £6.6 billion has been announced for the independent operators for the next few years.

      The truth is that this country is more than a decade behind of where it should be, and BT certainly has been a main contributor to this past failure. It is desperately trying to catch up, having finally come to the late realization that a telecom company is about telecom services, not the wasteful BT Sports or other side ventures.

    7. Fastman says:

      gnewton

      10 behid where it shoud be !!!! really

      Gnewton so FTTP 8 or 9 times the price of FTTC back 2014/2016 (and about 2 or 3 engineering visits- so tell goverment we spend aload more more deliver less and miss the milestones for contracts —

      no one in their right mind would have advocated that which is why the gigger mvoe to FTTC to meat the 95% government target

      (that issue not change till Openreach moved away from Manifold to Connectorised block – which was only after Clive Selly became CEO of Openreach which was only in January 2016 s- m
      Gnewton its neither here not there now — ps you never answered the question of whether you benefitted from BDUK ?

      im about doing the right thing and always have been — whether you like that or not im not bothered either way

  4. Mark Scott says:

    “…The discussions are confidential and may or may not lead to an outcome.” Of course they will lead to an outcome. The outcome will either be “do nothing”, or “do something”….

  5. Matthew says:

    I hope Disney buy this I would love see ESPN in the UK properly they do a brilliant job in america.

  6. Codsall Andy says:

    BT Sport have never had the volumes to offer value for money given how much they have to bid for Sports to compete with SKY and now Amazon with its almost bottomless pockets. As a result I pay more per month for BT Sports via SKY than I do for a much more comprehensive SKY Sports package. The result is I have just cancelled BT Sports from the end of the football season. I would be very interested to see their churn rate data.
    Surely the goose that lays the golden egg for years to come for BT will be fibre to the premises and they need to get that sorted before rivals like Virgin and Citifibre mop up significant chunks of BT’s traditional heartlands? So selling off non-core businesses to raise capital must make sense

    1. CarlT says:

      Virgin have never mopped up significant chunks of BT’s heartlands, they achieve about 40% take up.

      CityFibre are interesting. Openreach respond very quickly to their build in our area.

      Openreach pre-empted CityFibre to Morley, Leeds, and have added Hunslet and Rothwell to the Fibre First programme as CityFibre commenced their builds there.

      Fair to say that CityFibre are considered far more of a threat by Openreach.

      Which is fantastic for consumers.

    2. Ivor says:

      Virgin are already in the “desirable” areas and unlikely to expand massively (as much as their new parent co keeps talking about it) – these are the areas that OR will be trying to upgrade first and will be on the target lists of the altnet crowd.

      I’m not sure the consumer is truly well served by the same companies digging up the same roads and chasing the same people (alongside OR doing what they can to bin copper), but it is the approach the regulator insists is brilliant and fantastic and Very Digital Levelling Up Britain

  7. Ray Woodward says:

    The reality is of course that BT Sport (in itself) isn’t worth *that much*.

    The value resides in the broadcast rights it holds …

    Personally I expect that BT will realise the biggest monetary income from selling off its rights to other broadcasters (rather then selling the channel itself.

    So I expect it to be broken up and its rights to go across other subscription operators in the UK (be they broadcasters or online operators) …

  8. GARY LUCAS says:

    As long as it pushes the share price up I’m all for it

    1. A_Builder says:

      Therein lies the real story.

      Dismantling the misguided dreams of the previous board has started to lift the shares up:-

      Move away from copper; and
      Stop playing at being a broadcaster; and
      focus on fundamentals.

      BT also needs to make sure it is not sucked into delusions about being a wider tech company.

    2. Fastman says:

      A builder

      the busiess will do what it determines ist best strategy — on its own

      Sport drive fibre take up and more CPs use of the wholesale Network and product and always has done – thats the fundamental you have not grasped

    3. GNewton says:

      @Fastman: “the busiess will do what it determines ist best strategy — on its own ”

      Are you really that naive to believe in that? The shareholders will tell you a different story!

      Nearly 4/5th of this country still haven’t fibre broadband.

      Openreach doesn’t even own the network assets. It’s good for BT to give up on its stupid sports adventure.

    4. Fastman says:

      Gnewton

      Nearly 4/5th of this country still haven’t fibre broadband. (ASA have defined fibre broadband as >24 /mbps and 97% have that as you well know) (again a broken broken record)
      Openreach doesn’t even own the network assets. It’s good for BT to give up on its stupid sports adventure.

      You clearly dont understand the Business – the FTTP platform needs customers / CP. – the need for Bandwith drives CPs into mass use of Platform — BT sport did that with FTTC (as it forced Sky into the FTTC market and waway from the reliance of WBC copper it will do it again with FTTP (there are still not enough providers using the FTTP platform) – i would think there would be sharing of it but i dont expect BT Sport to be sold off (but what do i know)

    5. GNewton says:

      @Fastman: It’s amazing to see how many people are brainwashed into believing there copper VDSL magically became fibre overnight…

      What ASA did is an example of how an illusion of truth is created (https://www.bbc.com/future/article/20161026-how-liars-create-the-illusion-of-truth)

  9. Roger_Gooner says:

    @A_Builder: “Therein lies the real story.

    Dismantling the misguided dreams of the previous board has started to lift the shares up:-

    Move away from copper; and
    Stop playing at being a broadcaster; and
    focus on fundamentals.

    BT also needs to make sure it is not sucked into delusions about being a wider tech company.”
    Let’s remember that BT was losing millions of customers to Sky, so there was certainly a case for creating BT Sport and bundling BT Sport for free with broadband packages. This has succeeded although at the huge cost spending £9bn on expensive rights to broadcast top-flight football over the past eight years. After losing money it seems as if BT Sport is now making money.

    BT’s customers have benefited as they’ve had BT Sport since 2013, and it’s only since 2020 that it’s been possible to get Now TV on their BT subscriptions (meaning that Sky Sports channels can be added to existing BT packages).

    The situation now is that BT and Sky are being less competitive and more collaborative in that each others’ products are available on their platforms. I think that BT now wants to be like Virgin Media (an aggregator of content) through its BT TV YouView platform, so this is why a sale of BT Sport is being investigated.

    1. A_Builder says:

      Are we conflating BT / OR / Sky (which uses OR – mostly)?

      Maybe the answer was to create a better differentiator – FTTP?

      A lot of shift ‘n’ drift is down to a lack of real differentiator and a great intro offer.

      Lockdown #n has brought the quality issue into sharp focus.

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