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BT, a former British telecoms monopoly, moved
into sport in 2013 when it beat Rupert Murdoch's Sky to
Champions League rights, hoping that exclusive content would
help it stem broadband customer losses.
Some investors, however, have fretted about the volatile cost of
sports rights, particularly when BT is spending billions on
rolling out fibre broadband and Amazon, DAZN and others have
joined the fray.
The company said last year it was considering options for the
unit, which is now profitable, including an outright sale.
BT Chief Executive Philip Jansen said BT saw no downside in the
Discovery tie-up, and was very happy with the terms it had
agreed on content. It wants to complete the deal in Q1.
He said BT was committed to retaining its existing major sports
rights including its crown jewel: Premier League soccer showing
matches between Manchester City, Liverpool, Chelsea and
Manchester United.
The 50:50 joint venture will also have rights to Eurosport's
Olympic Games, UEFA Champions League, UEFA Europa League, as
well as cycling, tennis, rugby and other sports, the companies
said.
Sources last month had told Reuters that DAZN was near to buying
BT Sport, and negotiations went down to the wire on Wednesday
night. One source said the price jumped after Discovery made a
last-minute offer, resulting in DAZN walking away.
DAZN Chairman Kevin Mayer said the deal had "become
uneconomical", but he remained committed to growing his business
in Britain.
Jansen said there were two very good options on the table, but
in the final analysis Discovery won out.
"From a corporate financial point of view, the profile much
improves, because obviously there will be synergies, both in
cost and revenue," he told reporters.
"And it keeps us very much in the competitive framework for what
is a very interesting, exciting content market."
CONTENT LURE
JB Perrette, president and chief executive of Discovery
Streaming and International, said the partnership was akin to
the WarnerMedia deal the U.S. media company struck with another
telecommunications giant, AT&T.
In the case of WarnerMedia, Discovery is acquiring that business
for $43 billion, while it will contribute its assets to a joint
venture.
"We understand the importance of content to our business,"
Perrette said in describing BT's interest in the joint venture.
"Can we do this in a way with someone who brings synergies to
the table, brings operating expertise and a ton more content
that we can bring to our customer base?," he said BT asked.
As well as an expanded sports portfolio, Discovery hopes the
deal will attract subscribers to its entertainment offerings on
Discovery+.
Cut-throat competition between BT and Sky for the best soccer
rights eased in 2017 when they agreed to carry each others
channels.
BT said on Thursday it had agreed a new reciprocal deal
stretching beyond 2030 with Sky, which is now owned by Comcast.
Shares in BT, which also lowered its revenue forecast for the
year, closed down 5%.
Revenue fell 2% in the nine months to end-December to 15.68
billion pounds, with declines in global and enterprise partly
offset by growth in the Openreach network. For the full-year it
expects a 2% decline.
Jansen said, however, that cost savings meant it was keeping its
adjusted earnings target of 7.5 billion to 7.7 billion pounds
this financial year and more than 7.9 billion pounds next year
unchanged.
(Additional reporting by Elvira Pollina; Editing by Kate Holton,
Emelia Sithole-Matarise and David Evans)
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