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Analysts fear that Sky and BT overpaid for Premier League rights

Financial analysts have suggested that BSkyB overpaid for the next three-year cycle of live UK rights for the English Premier League, from 2013-14 to 2015-16, after the pay-television broadcaster acquired 116 matches per season for £760 million (€938 million /$1.173 billion) per season.

The Guardian quoted analysts from financial services companies Deutsche Bank and UBS following the deal, under which Sky will pay an average of £6.55 million per game – up from £4.7 million per game for 115 matches per season in the current three-year cycle, from 2010-11 to 2012-13.

UBS said the deal came as a “negative surprise” while Deutsche Bank said that the “blowout rights inflation was way above our forecasts,” but added that the deal would not be “a game-changer for Sky’s competitive position.”

The newspaper said that Sky would not pass on the extra cost of the rights to its 10 million subscribers, and quoted a source from the company as saying that savings would be made by spending less on other programmes.

Sky’s share price on the London Stock Exchange closed down 3.5 per cent at 671p on Thursday, the day after the results of the Premier League tender were announced.

Shares also closed down on Thursday at telecommunications company BT, which effectively dislodged pay-television broadcaster ESPN as the league’s secondary live domestic rights-holder by acquiring 38 games per year – including 18 first-pick matches – for £246 million per season. BT’s share price fell by 7.4p to 201.7p.

Steve Liechti, an analyst at financial services company Investec, said of the BT deal: “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.”