Friday 20 April 2018

Sky shares tumble over massive Premier League bill while BT shares advance

Sky's total outlay was 83pc higher than last time and its cost per match increased by 70pc.
Sky's total outlay was 83pc higher than last time and its cost per match increased by 70pc.

Hundreds of millions of pounds were wiped off the value of Sky yesterday morning as investors reacted to its massive £4.2bn bill for football rights as a result of the Premier League auction.

The shares opened down 5pc after the company agreed to pay £330m a year more than analysts were expecting to maintain its dominance of the domestic top flight.

It meant Sky's total outlay was 83pc higher than last time and its cost per match increased by 70pc. The sell-off made Sky the biggest faller in the FTSE 100.

In contrast to the negative reaction to Sky's bidding in the auction, investors welcomed the outcome for arch-rival BT and made it one of the biggest risers in the main share index.

It will pay a total of £960m over three years for around a quarter of live Premier League matches, compared with £738m under its current deal.

That equates to an overall increase of 30pc and inflation per match of only 18pc.

BT shares were up more than 4pc in early trading yesterday. As well as enjoying lower inflation than Sky, BT won the Saturday evening packages of matches, which attract bigger audiences that its current Saturday lunchtime slot.

Sky said it would meet its higher bills by cutting costs in customer service and potentially raising prices but several analysts reduced their forecasts.

Jerry Dellis of Jefferies said the auction was "sobering" for Sky, arguing that its apparent determination to hold onto the Premier League was not consistent with its claims that it has built a more broadly based subscription base with investments in drama and other programming.

He said: "Sky appears to have admitted that a dominance in Premier League rights is pivotal to its UK business.

"Investors may also question whether it was necessary to pay so much when neither BT (nor anyone else) seems to have been bidding ambitiously for more than two packages."Liberum said.

"We doubt that Sky can recover the extra costs both on the revenue and cost side". (© Daily Telegraph, London)

Telegraph.co.uk

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