sky beats bt to record premier league tv deal 182062015

Sky wins 5 of 7 packages to maintain a majority share of live broadcast rights for the Premier League from 2016-2019, beating BT.

The big news is that the total prices paid broke £5bn to hit £5.136bn, a jump of more than 70% on the same package last time around and a new record. This is a big jump and shows the huge competition BT posed in forcing Sky to bid to new heights. The consensus was for prices to reach as high as £4.4bn, so this is much higher than anyone expected.

Sky of course  had the most to risk with this TV deal and has been forced to pay over the odds to secure prime packages including the Sunday lunchtime kick offs, which typically attracts the highest viewing audience. I expect Sky shareholders to react warmly to this latest victory but in the medium term, there has to be a deeper concern on the spiraling prices paid by broadcasters and where TV deals now head.

The pressure was really on Sky Plc here following the fact that they were considerably blindsided by BT a few years ago when they lost broadcast rights to the UEFA Champions League from 2015.

The amount of money paid is simply, huge. Sky has effectively paid 83% more for the same TV rights it currently owns, breaking to more than £1bn per season. BT also paid more this time around, a jump of more than 30%.

Sky wins the battle, but pays the price

What has become clear to me is looking at the prices paid, BT did not go for outright victory here. They paid 30% more than last time to ensure it secured a decent chunk of the coverage but the amount paid by BT does not convince me that they went all out for a big win. As such, I estimate that Sky has potentially over paid, to the tune of roughly £1.2bn and could have secured the same amount of packages it has won for just over £3bn.

These are record prices paid and represents a huge coup for the Premier League.

BT paid £897m for live broadcast rights of both the UEFA Champions League and Europa League for three years from next season (2015-2018), something Sky did not see coming at all.

2016-19 Premier League TV deal (highlights):

• Sky wins 5 packages (A, C, D, E and G)
• Sky retains Sunday live kick offs
• BT wins 2 packages
• Total deal valued at £5.136bn (+70% from last time)
• BT to pay £320m per season (+30% from last time)
• Sky pays £1.329bn per season (+83% from last time)

What was up for grabs?

There are seven TV packages available for broadcast rights of the FA Premier League for three seasons beginning 2016. Each package offered different game slots and categories, such as the 4pm Sunday TV slot, which is normally reserved for the highest profile matches and attracts the highest TV audience.

• 7 TV packages
• Live broadcast rights from 2016-2019
• 168 live games (maximum of 126 games per broadcaster)
• 504 total games (including non-live broadcasting)

A battle Sky simply could not risk losing

This deal is so important for Sky due to the severe competition in the market and its failure to adapt its model to a one-for-all strategy which encompasses broadband, TV and mobile. This is an area rival BT is taken a giant leap towards with the acquisition (subject to regulatory approval) of EE for £12.5bn - a deal which sent BT shares to their highest levels since 2001.

Quite simply, this was a battle Sky simply could not afford to lose. Its recent results has shown stronger than expected customer loyalty but its focus on advertising and subscription income is heavily dictated by the quality of its broadcasting. Its recent ventures into Sky made TV shows such as Fortitude is expected to pay dividends but it’s football packages remains a huge attraction. Sky faced huge pressure from BT but they had one key advantage this time around, they were no longer blindsided. Having lost UEFA Champions League broadcast rights to BT from next season, they knew the battle they had on their hands. And what’s more, there was speculation that Discovery (Eurosport) and BEinSports could also make an bid to rival both Sky and BT.

So Sky knew what was coming and they have reacted accordingly, hence why they paid 83% more than last time around, whilst BT paid 30% more.