If BT Group (LSE: BT-A) and Sky (LSE: SKY) were football teams, they wouldn’t be in the same league as far as investors are concerned.
The BT share price is up a dashing 236% over the past five years, against a lumbering 73% at Sky (although both beat the FTSE 100, however, up 33% over the same period).
BT surprised everybody by thrashing Sky on home turf 18 months ago with its smash and grab raid on Premier League broadcasting rights, and now it’s at it again.
Good Sport
The telecom giant’s broadcasting division has just won exclusive rights to broadcast the UEFA Champions League for the next three seasons.
The competitions will be free to customers who take BT TV, who can also see the tournament’s despised sibling the Europa League. BT will broadcast all 351 matches.
Those watching on Sky via the BT Sport App or on BT Mobile will have to pay £5 a month to see the matches.
BT is also launching three new channels: BT Sport Europe, BT Sport Showcase (which will air some Champions League games free to all) and BT Sport Ultra HD.
The Champions League is the most prestigious club competition in Europe, but will the £897m investment score for BT?
Different League
Sky has been spitting sour grapes, stating that it had just had its lowest ever Champions League audiences, with no single game appearing in its top 40 football matches.
The Premier League is seven times bigger, it says.
I don’t recall Sky complaining when they held the broadcasting rights and were hyping the tournament to the heavens, but they have a point.
The tournament drags on, the group matches ain’t much of a spectacle (FC Basel 1893 v PFC Ludogorets Razgrad, anyone?), and English clubs aren’t the forces they were.
It also lacks the local “needle” that the Premier League brings, which is why Sky paid £4.2bn for three years of domestic live coverage.
Winner Takes Nothing
BT has impressively set out its stall, but football message boards suggests the fans aren’t convinced, moaning about shelling out more money for the same product, and sceptical about the continuing appeal of European football, especially now it has largely lost its terrestrial stage.
Much of their ire is directed at Sky, which has been charging more but will now be offering less.
To recoup its cost, BT needs to sell the Champions League pubs and clubs as well as home viewers. They may struggle, unless English clubs put up more of a fight next season. Sky Sports still has most of the matches viewers want to see.
Sky is certainly the loser from this deal, but I’m not convinced that BT will end up a winner.