Throwing down the gauntlet to its major rival BSkyB, BT said that it will not charge its broadband subscribers for the three sports channels it plans to launch in August, which will include 38 Premier League games a year as well as a host of other sports.
BT has invested more than £1bn on sports rights alone, and will be running the TV division at a massive loss in an attempt to stem the flow of customers who have signed up to rivals.
Sky, which has been dominant in pay TV since the early 1990s, moved onto BT’s turf in 2006 by offering customers broadband services. It has since become the UK’s second-largest internet provider by offering its sizeable base of TV customers cheap internet deals, while Virgin Media has also muscled in on BT by packaging TV and broadband together.
Since BT made a shock move into sports by spending £738m on Premier League rights last year, industry watchers have questioned whether it would be able to create a business capable of living alongside Sky where other upstarts such as ESPN and Setanta Sports have failed.
However, although BT will have some revenues from the sport channels by charging non-BT broadband subscribers on Sky and Virgin Media £12 per month, the company made clear that its major aim was to sign up more internet customers rather than challengE Sky’s TV position.
“At the moment too many people feel squeezed out,” Gavin Paterson, who heads BT’s consumer division, said. “Half the households in the UK want to watch high quality sport on TV but less than half of those are prepared to pay the high prices on offer.”
Sky, whose shares fell six per cent, hit back, claiming: “BT Sport is not ‘free’ and customers are smart enough to realise they’ll pay for it through more expensive broadband.”