Bottom Line: The war between BT and Sky gets vicious

 
Marc Sidwell
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WHEN you move, fall like a thunderbolt.” BT’s new chief executive Gavin Patterson has clearly been reading his Sun Tzu. BT’s massive bid for Champions League broadcast rights came out of the blue, scoring a key victory in its war with BSkyB for TV sports dominance.

But the best generals have to consider if the cost of winning one battle is really worth it. Not only has BT paid over the odds – its £897m bid more than doubling the existing £400m deal – but it has reinforced the stakes in its struggle with Sky.

That seems unwise. Sky cannot afford to lose on this territory – sports subscriptions are at the core of its business model. It cannot ignore the holes shot into its scheduling from 2015. A daring move like this succeeds by surprise but inevitably provokes escalation in response. This could get very expensive, very quickly.

BT’s latest results last week showed some promise – with revenue remaining stable in the second quarter rather than shrinking for the first time in four years. But the unexpectedly high costs of its drive into sport helped push an eight per cent increase in operating costs.

BT feels it can afford an outsize bid this time. But this was only an opening gambit. Its opponent will be relentless. There’s some more advice of Sun Tzu’s Patterson should consider. Do not press a desperate foe too hard.