Nick Goodway: BT Sport scores early in a game to be the biggest and best broadband provider
Friday 01 November 2013
Outlook The strip may have changed from the green and white hoops of Ian Livingston's beloved Celtic to the scarlet red of Gavin Patterson's Liverpool, but the game remains the same.
BT, our 167-year-old telephone company, is staking the thick end of £1bn of its shareholders' money on sport. To be precise, it hopes that BT Sport, which launched at the start of August, will prove to be the glue which keeps existing broadband subscribers and the honey which attracts new customers to it.
The first view of how much BT Sport is doing for the business came in its second-quarter numbers released yesterday. In the 14 weeks it has been up and running – seven each for Mr Livingston and Mr Patterson – the indications are good.
In those three months BT gained 156,000 new broadband customers – almost double the number it achieved a year earlier. Sky added 111,000 during the same period which leads to a puzzling question. If total additions across the phoneline network were 168,000, just how many broadband customers did TalkTalk lose?
But that is a mere aside of interest to anoraks and analysts, not really part of the big picture.
What really matters is what Mr Patterson likes to call the "halo effect". Can Clare Balding and co not only halt BT's gradual decline in retail customers but actually trigger a rise in the amount the company can sell to its customers?
What was cheering about yesterday's numbers was that rather than the expected fall in profits because of the £140m spent on BT Sport in the quarter they actually rose slightly by 2 per cent to £609m.
Aside from odd accounting adjustments for depreciation and financing costs, the main reason BT beat City forecasts is that it is still managing to drive costs down in its older businesses. That saw strong margins at Openreach, Wholesale and Retail, while Global Services (the source of two profits warnings in the past) saw revenues dip but looks set for a stronger third quarter even if its margins leave a lot to be desired.
BT Sport scored its biggest audience when Crystal Palace were beaten 2-0 by Arsenal. Admittedly it came as part of BT's freebie weekend offer when people could dip in to test the service, but at the peak it attracted more than 1 million viewers.
On other days the numbers have not been quite so impressive, but in both Premier League football and Premiership rugby BT Sport is pulling in far larger audiences than its predecessor sports channels Sentanta and ESPN.
It is worth remembering that this is not a battle between BT Sport and Sky as to which them can have the most successful sports channel in the UK. It is a much more fundamental war over which is the biggest and best broadband provider in this country.
To mix one's metaphors, BT may have scored early in the game but this is a marathon not a sprint.
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