BSkyB shares fall after £3bn Premier League deal
Fears that media giants BSkyB and BT overpaid in their £3 billion
Premier League deal sent shares in the pair sharply lower today.
The eye-watering price was much higher than the City had expected and represents a 70% hike on the current partnership with Sky and ESPN.
BSkyB shares dropped more than 7%, wiping £764 million from its market value, and BT was nearly 3% lower as investors got their first chance to react to last night's deal for domestic live television rights for the three seasons covering 2013/14 to 2015/16.
Satellite broadcaster BSkyB has said it will offset the higher price through savings elsewhere in the business, although its reassurances failed to prevent the shares slide.
Investec analyst Steve Liechti said Sky's own price was 40% higher than last time and much higher than the 15% increase expected in the market.
He said: "The cost is higher than expected and BT arguably looks a more potent competitor than ESPN, even if we have some doubts over its content strategy and pay TV product performance to date."
He added there were also long-term questions over "what happens next time" given the benchmark set by the latest rights contract.
Citigroup analysts said that despite Sky's success in retaining the rights, "there is no doubt this counts as an adverse outcome for BSkyB".
Long-term Premier League partner Sky paid £2.28 billion to secure the rights to show 116 games a season and newcomers BT forked out £738 million to gain a 38-game-a-season foothold.
Premier League chief executive Richard Scudamore yesterday admitted he was surprised by the final total.
He said the thrilling climax to last season, when Manchester City won the title on the final day, was a significant factor in the recession-busting 70% increase.
The new deal will extend Sky's relationship with the Premier League to 24 years, while the governing body is breaking new ground with BT.
BT will launch its own "football-focused channel" through BT Vision, which will offer new interactive features, but they will look to make it available on other platforms.
Sky's five packages cover matches on Saturday evenings, Sunday lunchtimes, Sunday afternoons and Monday evenings.
BT has bought the rights to matches that kick off at 12.45pm on a Saturday and for bank holiday and midweek games.
ESPN has one more year remaining on the current deal before the new arrangement kicks in.
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