BSkyB Inks Key Football Deal In The UK

BSkyB has won a key football broadcast rights deal in the United Kingdom alongside the BBC. BSkyB has signed a new domestic deal with the English Football Association that shares with the BBC rights to cover England internationals, the flagship FA Cup competition as well as the FA Community Shield and the FA Women’s Cup. The deal, announced July 10, runs for four years and will end at the end of 2007/8 season.

The previous rights deal with the English FA had been worth GBP345 million ($564 million) over three years. Terms of the new deal were not disclosed, although local reports put the value at GBP300 million ($490 million) over the four years. If these figures are correct, it would represent a decrease in the value of broadcast rights by 30 per cent per annum. For the English FA, while there is a sense of relief of getting a new deal done at a difficult time, it has had to accept a far lower price than it would have hoped for.

One of the significant aspects of the new deal is that BSkyB will become in essence the secondary player. But BSkyB has sufficient confidence in its customer proposition that it feels it no longer needs to dominate the sports broadcasting rights market. With the price being paid for sports rights decreasing across Europe, BSkyB is in a position to pick and choose which particular rights it wants to go after. With close to 7 million subscribers and low churn rates, it is now looking to cut costs in terms of programming, while maintaining the core parts of its bouquet.

Mike Hilton, a media equity analyst at UBS Warburg, said in a research note: “Sky will become the junior partner under the new contract with second choice of FA Cup games and highlights and delayed broadcast of the England matches. As a result Sky’s share of the costs could fall from GBP75 million ($122.3 million) per annum to around GBP30 million ($48.9 million).”

–Mark Holmes