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Murdoch's BSkyB looks to secure base in UK

Thursday - 1/30/2014, 12:30pm  ET

PAN PYLAS
Associated Press

LONDON (AP) -- British Sky Broadcasting PLC sought Thursday to secure its base against its insurgent rival BT PLC by securing some sports rights and a long-term deal with U.S. pay-TV network Home Box Office.

The London-headquartered satellite broadcaster, whose biggest shareholder is Rupert Murdoch's 21st Century Fox, Inc., said it had secured six long-term rights deals in six sports, including the 2017 rugby tour to New Zealand by the British and Irish Lions and Scottish cup football.

Perhaps more importantly, it said it has extended a partnership with HBO through to 2020 that will see the channel Sky Atlantic continue to showcase programs like Game of Thrones, Girls and Boardwalk Empire as well as upcoming shows like True Detective and Looking. The two companies, who have worked together since 2010, will also co-develop and produce new drama.

"HBO is synonymous with must-see TV that pushes creative boundaries, so it's no wonder that Sky Atlantic is such a hit with our customers," said Jeremy Darroch, BSkyB's chief executive.

The partnership between the two companies has been replicated by other broadcasters around the world, including in Europe, Australia, New Zealand and in the Middle East.

"The deal with Sky was trailblazing in that it served as a model for similar arrangements we entered into around the world, with Sky Atlantic held up as the gold standard," said Richard Plepler, HBO's CEO.

The new deals are BSkyB's latest moves in a battle to win subscribers away from BT in Britain. Since 1992, when it shocked Britain's broadcasting industry by getting the live rights to English Premier League football, BSkyB has been the dominant force in the sports rights arena. Football has been central to BSkyB's business model.

However, over the past year or so, it has faced stiffer competition from BT, the former national telecommunications monopoly that has grabbed a sizeable chunk of sporting rights as it tries to cement its broadband business. Last November, in its boldest move yet, BT won the exclusive rights to the Champions League, Europe's top football club competition, over BSkyB and public broadcaster ITV.

That hasn't come cheap for BT, though. The Champions League rights cost around 1.08 billion euros ($1.46 billion) -- a deal equivalent in its shock value to BSkyB's capture of the Premier League rights over 20 years ago.

BT, which reveals its own quarterly results Friday, is expected to launch more offensives against BSkyB's sports portfolio. And it is widely expected to make a stronger push into entertainment, hence the importance of the HBO partnership extension.

The battle with BT appears to be costing BSkyB, too, as the cost of sports rights spike. The company reported a drop in pretax profit for the six months to end-December -- to 554 million pounds from 610 million the year before. Even so, the results beat forecasts and the company's share price rallied 4.1 percent. BT shares were flat.

The skirmishes between BSkyB and BT come ahead of the biggest battle of all -- the domestic rights for the next round of Premier League football.

The bids are due in coming months and the rights' cost is likely to rise substantially. The last set of domestic three-year rights generated a total of a little more than 3 billion pounds, with BSkyB splashing out 1.78 billion pounds for a majority of the matches on offer.

___

Rob Harris contributed to this report.


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