Premier League takes its first ever pay cut as BT and Sky pay less for live matches - Telegraph.co.uk

http://www.telegraph.co.uk/business/2018/02/13/premier-league-takes-first-ever-pay-cut-bt-sky-pay-less-live/

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BT and Sky have given the Premier League its first ever pay cut after agreeing to pay £4.46bn for rights to the majority of live top-flight matches.

Five out of seven packages of matches have been awarded in the football’s triennial big money auction, covering three seasons from 2019. The price means the the total cost of domestic Premier League rights is in line fall for the first time since the competition began more than quarter of a century ago.

Sky will remain the dominant Premier League broadcaster after it secured four of the five packages, including Monday, Friday and Saturday evenings, as well as Sunday matches. The pay-TV giant will pay £9.3m per match, a 16pc discount on its current bill of more than £11m.

BT has secured rights to Saturday lunchtime kick-offs at a cost of £9.2m each. It represents an increase on company’s current bill of £7.6m per match and means a slightly weaker schedule as BT Sport currently shows Saturday matches in the more popular 5.30pm slot.

However, unless its buys one of the two unsold packages, BT’s overall Premier League cost will fall from £320m to £295m per season.

It currently has rights to 42 matches per season but has so far secured only 32 in the new auction.

The deflation is a blow to the Premier League, which had hoped that US tech giants such as Amazon and Facebook would arrive to ramp up competition and push prices higher again.

Its total income from domestic rights increased 70pc last times as BT and Sky’s broadband and pay-TV rivalry drove spiralling bids.

In the current auction, with both companies more financially stretched and no serious new bidders for weekly live matches, the competition was dampened.

BT faces pressure on its balance sheet as it invest in its network in the wake of a profit warning and faces cash demands from pensioners and shareholders.

Sky, which bore the brunt of inflation in the last auction, has meanwhile been forced to seek painful savings across its business.

Tottenham Hotspur’s English striker Harry Kane  celebrates in front of a TV camera

Credit:
 ADRIAN DENNIS/AFP

At the same time it has been forced to increase its investment in drama and other forms of entertainment as the threat from massive content spending by Netflix and Amazon rises, with Apple waiting in the wings. Sky’s profits are not expected to increase as a result of lower Premier League costs, but its investment in other content could.

Against a tough backdrop and after years of aggression BT and Sky signed a peace treaty in December in the form of a mutual wholesale deal for their sports channels. The pact is due to kick in by the time the new Premier League rights packages begin and undercuts the incentive for BT and Sky to attack each other in the auction.

Premier League clubs are left hoping that the two packages that remain unsold will bring them closer to parity with their current domestic rights deal, which is worth £5.14bn over three years.

The rights still on the block were designed to attract the tech giants.

One package of 20 matches covers an entire bank holiday weekend in the Premier League and one entire midweek programme of matches. The other covers two entire midweek programmes.

Neither is viewed by BT and Sky as worth as much as the regular weekly packages they have bought, but Premier League officials hoped the could be used as “events” to attract audiences.

Sources close to the bidding this evening said that it was possible that the remaining live rights could be bundled with rights to highlights clips, which are expected to draw interest from Facebook and Twitter. The Premier League said there were “multiple” bidders interested in the packages.

Sky could buy only one, as no bidder is allowed more than five. It is understood that BT has not ruled out buying more rights.

Neil Campling, an analyst at Mirabaud, said: “The simple conclusion is that the broadcasting battle between Sky and BT is over.

“Since the decision in December for both companies to sell each other’s channels it became clear that this wasn’t going to be the same nosebleed cost inflation of previous auctions.”