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    BT.A   GB0030913577

BT GROUP PLC

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Sky pays record 4.2 billion pounds for top Premier League rights, BT takes the rest

02/10/2015 | 05:54pm EDT
Manchester City's captain Vincent Kompany celebrates after winning the English Premier League trophy following their soccer match against West Ham United

LONDON (Reuters) - Pay-TV group Sky (>> SKY PLC) has agreed to pay 4.2 billion pounds to show 126 live English Premier League matches a season from 2016 to 2019, pressured by fierce rival BT (>> BT Group plc) to smash analysts' forecasts and secure the best games.

LONDON (Reuters) - Pay-TV group Sky (>> SKY PLC) has agreed to pay 4.2 billion pounds to show 126 live English Premier League matches a season from 2016 to 2019, pressured by fierce rival BT (>> BT Group plc) to smash analysts' forecasts and secure the best games.

After one of the most high-profile broadcast auctions of recent times, the Premier League said that Sky had won five of the seven rights packages, including the most popular Sunday afternoon matches showing the likes of Manchester United and Arsenal.

With BT paying 960 million pounds to show 42 games a season, the two companies will shell out a combined 5.14 billion pounds over three years, well above the 4 billion pounds analysts had expected and above the 3 billion pounds paid for the current contract.

Sky, which is 39 percent-owned by Rupert Murdoch's 21st Century Fox (>> Twenty-First Century Fox Inc) and synonymous with top-flight English football, said it would cut costs within the business and likely raise some prices for customers to afford the new contract.

Premier League Chief Executive Richard Scudamore said he was surprised by how much the matches had fetched, but he noted that the game was the beneficiary of the two media giants using football to draw and retain customers.

"These are huge companies doing huge things in a market that has gone way beyond football," Scudamore said.

Sky, has built its business around offering exclusive programming such as premium sports and drama to customers who can also take telephony and broadband packages.

BT CHALLENGE

But it has faced a far greater challenge in recent years, since the deep-pocketed BT copied its business model by buying up broadcast rights to attract customers to its new superfast broadband platform.

The 169-year-old telecoms company had already ramped up the pressure on Sky by winning the right to show all the live European Champions League matches for three years from the 2015/16 season, forcing Sky to up its game in the English auction to retain its position as a leading sports broadcaster.

Scudamore said the League had received a broad interest in its rights but would not say who else had bid to show the games, which feature world-class players such as Chelsea's Diego Costa, Manchester United's Robin van Persie and Arsenal's Alexis Sanchez.

After three days of bidding, Sky won the right to show matches on Sunday afternoons and early Saturday games, while BT will show Saturday evening matches.

"We went into the Premier League auction with a clear objective and are pleased to have secured the rights that we wanted," Sky Chief Executive Jeremy Darroch said.

Analysts at Bernstein said they had been surprised by the 83 percent rise in Sky's three-year deal.

"Sky is on a trajectory that is unsustainable if a significant portion of the cost base must be expected to increase by such large growth rates every three years," they said.

(Editing by David Goodman and Martyn Herman)

By Kate Holton and Paul Sandle

Stocks treated in this article : BT Group plc, SKY PLC, Twenty-First Century Fox Inc

© Reuters 2015
Stocks mentioned in the article
ChangeLast1st jan.
BASE CO., LTD. 0.00% 5150 End-of-day quote.-16.26%
BASE, INC. 1.08% 1214 End-of-day quote.-37.81%
BEST INC. 9.23% 1.42 Delayed Quote.-30.39%
BT GROUP PLC 0.94% 156.15 Delayed Quote.18.07%
FOX CORPORATION 1.02% 37.71 Delayed Quote.29.50%
MANCHESTER UNITED PLC 2.10% 17.99 Delayed Quote.7.47%
PREMIER, INC. -1.07% 38.98 Delayed Quote.11.05%
RISE, INC. -4.00% 24 End-of-day quote.0.00%
SKY 0.00%End-of-day quote.70.70%
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Analyst Recommendations on BT GROUP PLC
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Financials
Sales 2022 21 102 M 28 990 M 28 990 M
Net income 2022 1 639 M 2 252 M 2 252 M
Net Debt 2022 18 390 M 25 264 M 25 264 M
P/E ratio 2022 9,27x
Yield 2022 4,67%
Capitalization 15 473 M 21 282 M 21 257 M
EV / Sales 2022 1,60x
EV / Sales 2023 1,63x
Nbr of Employees 99 700
Free-Float 74,2%
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Number of Analysts 23
Last Close Price 156,15 GBX
Average target price 198,36 GBX
Spread / Average Target 27,0%
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Managers and Directors
Philip Eric Rene Jansen Chief Executive Officer & Executive Director
Simon Jonathan Lowth Chief Financial Officer & Executive Officer
Ulrica Fearn Group Finance Director
Jan Petrus du Plessis Chairman
Howard Watson Chief Technology Officer
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