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Shares in both BT and Sky are higher this morning, the latter strongly outperforming the former after the latest Premier League rights auction results were announced. Sky is the clear winner, seeing its average cost per game falling 16% from £11.1m to £9.3m and picking up a further two games per season from 2019-22 to take its total to 128. BT, on the other hand, has won just one package for early kick-off games, and although this marks an 8% saving on its previous bid for the same slot, it will see costs rise to £9.2m per match from £7.6m previously.
The unwillingness of both firms to bid aggressively comes just weeks after the announcement of a deal to cross-sell each other’s content, breaking a 4-year rivalry which had previously threatened Sky’s two decade sporting hegemony.
Evidently, Sky no longer feels the need to offer big money to beat its telecom incumbent rival, because said rival appears content retaining a much smaller number of games exclusively while customers have access to the full range of games available thanks to the cross-selling agreement.
With BT stepping back from their bold expansion into Premier League screenings, it also brings into question whether the 70% price increase for PL rights over the past four years has finally reached a peak.
Whilst the remaining two rights packages (for mid-week and holiday games) have yet to be dished out by the Premier league amid claims of reserve pricing not being met, today’s announcement not only suggests a de-escalation in the UK pay-to-view sports arms race; most interestingly, the fact that two packages remain on offer leaves a fresh opportunity for new media providers such as Amazon, Facebook and Twitter to enter the affray. By 2022, could we be watching the latest Manchester or North London derby exclusively on smart phones or tablets?
Henry Croft, Research Analyst, 14 February 2018
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