James Moore: That Sky-high bill went down like a poleaxed striker

 

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The Independent Online

Outlook The markets’ reaction to the blockbusting football rights packages secured by Sky and BT when trading opened in London was very telling.

With a £4bn hole in its pocket, Sky’s shares plunged into the red like a star striker poleaxed on the edge of the penalty area. BT skipped down the wing, its shares having recorded a sprightly gain.

The nearly £1bn it forked out is hardly chump change. But in terms of price per match, it has achieved its aims at a significant discount to its rival.

For BT, the Premiership is the cherry on top of its cake: “Buy into our service and we’ll chuck in some footy for free!” For Sky, it remains the key ingredient, even though it has recently been stressing all the extras that have been added on in recent years.

But its bumper payout demonstrates  that Premiership football is still king. Dominating the market for its consumption is what the business was built on and is embedded within Sky’s corporate DNA. The share reaction suggests that investors can see a problem even if Sky can’t.

It has to make this deal pay, but how much financial pain will its consumers be willing to put up with to make that happen?

Oh, there will be some cost-cutting. There’s always cost-cutting when an investment like this is made. But it might not be enough. If punters start to feel they’re being squeezed too hard and cut back as a result, then investors will have to share in the pain. It seems that they’re not altogether pleased about that prospect.

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