Brave experiment or overly ambitious folly? BT’s participation in the sports rights battle has moved to a new phase as it completes its joint venture with Warner Bros. Discovery.
BT entered the fray in 2012 by securing rights to Premier League matches and really made a splash a year later by capturing Champions League and Europa League games from under the nose of Sky.
The promise of top-level sports action was seen as a way of securing subscribers for its wider TV and broadband services.
“While this strategy may have enjoyed some success it involved hefty costs for a company which already had plenty of other demands on its cash flow and balance sheet, including upgrading infrastructure and paying out dividends,” said AJ Bell’s Russ Mould.
“The shares are up around 40% in the 10 years since BT Sport’s launch was announced, roughly in line with the FTSE All-Share over the same timeframe but growth in the dividend dried up before the company suspended payouts during the pandemic.
“Sports rights are highly prized as events such as football are one of the few areas guaranteed to attract to attract ‘live’ viewers as opposed to people watching via catch-up. Therefore, having a partner with deeper pockets to help fund the cost of securing rights as well as adding Discovery’s existing Eurosports channel to the mix looks an attractive combination.
“The results which accompanied news of the tie-up were solid enough – crucially customers seem to be sticking with BT despite the cost-of-living crisis and the company has made decent progress on the roll-out of 5G. The dividend is also in line with what was promised, and free cash flow is, critically, better than expected.
“BT still has plenty of issues to deal with, not least the complex and costly investment in broadband infrastructure and a big pension deficit, but at least it seems to be laying the platform to address these challenges.”