Shares in Sky and BT have risen after they agreed a new deal with the Premier League that has cut the cost of broadcasting top-flight football.
Sky, the owner of Sky News, was up by 2% and BT by 1% – though the latter later shed its initial gains to end the day little changed – after the £4.46bn deal to show 160 games a season for three seasons starting in 2019/20 was announced on Tuesday.
That was less than the £5.14bn they are paying in total under the current deal for 168 matches, and reduces the average cost per match from £10.2m to £9.3m.
Sky’s rise took it above the price that 21st Century Fox has agreed to pay in its £18.5bn takeover bid of the remainder of the company it does not already own.
That prompted some speculation that Fox might have to pay more for the deal – which it expects to complete by the summer but remains subject to a final decision by the Competition and Markets Authority (CMA).
Under the latest deal, Sky Sports will show 128 matches a season, two more than under the current deal, but is paying £199m a season less to do so.
BT will show 32 games a season, down from 42, and it is also paying less than last time – though its cost per game has risen by about a fifth.
A further two broadcasting “packages”, covering 40 games a season in total, remain on the table and have attracted interest from “multiple bidders”, according to the Premier League.
That leaves open the possibility of the likes of Amazon or Facebook becoming involved, after speculation ahead of the TV rights announcement that a bid might come from a tech giant.
Simon Leaf, sports lawyer at Mishcon de Reya, said that despite the potential concern of the Premier League that the amount paid had fallen, the result was “by no means a terrible situation”.
He said: “If a major tech giant, such as Facebook, is successful in winning even one of the two remaining packages, a three-way fight for all of the packages next time around is likely to lead to a resumption in the extraordinary growth seen in previous years.
“There’s also the international sale of these rights to be finalised over the next year or so, which will likely more than make up for any domestic shortfall.”
George Salmon, equity analyst at Hargreaves Lansdown, said securing more games at a lower cost looked like a “major coup” for Sky.
He added: “There’s always the chance the remaining two packages spring a surprise, but with reserve prices not yet reached, it’s safe to say Amazon, Netflix and other potential new entrants aren’t prepared to adopt the aggressive strategy Sky execs must have feared.
“All this means Sky looks much healthier than when Rupert Murdoch’s 21st Century Fox first bid for the business.
“In early trading the shares touched £10.95, 20p ahead of the price Fox has agreed to pay. This tells us Murdoch might need to come back with an improved offer.”
(c) Sky News 2018: Sky and BT shares rise after lower cost Premier League deal