Battle of the broadcasters – BT vs SKY
• BT yesterday attacked its major TV rival, offering Sky Sports 1 for as little as £6.99 a month
• Sky pre-empted the BT move by hiking its wholesale prices, hitting the telecom firm hard
IAN Livingstone, BT chief executive, could be staring down a £100m-a-year black hole after announcing a ground-breaking football package.
The former state-telecoms firm threw the first punch in the battle to knock Sky off its perch yesterday, announcing the UK’s first discounted offering of Sky Sports channels.
But the undisputed champion of subscription TV appeared to take BT by surprise, waiting until just hours before the announcement before saying it will hike the price it charges its customers – and BT.
The telecoms giant was prepared to absorb a small loss but now faces losing up to £7.08 a month on each sports subscriber. BT immediately said it will appeal to the Competition Appeal Tribunal (CAT).
The price war follows a controversial Ofcom ruling earlier this year that Sky, whose chief executive is Jeremy Darroch and chairman James Murdoch, must immediately slash the wholesale price it charges rivals.
However, crucially, the figure was linked to the amount Sky charges its own customers. By raising its retail price, Sky has been able to drag up the wholesale price from £10.63 a month to £13.42 for one channel or from £17.14 to £19.07 for both.
Yesterday BT would not be drawn on how many subscribers it hopes to attract with the new package but, according to analysts, the firm is likely to be aiming for 2m within the next five years.
If these subscribers sign up to BT’s sports output, assuming an equal split between the pricing options, BT would make a loss of £102.1m a year.
Gavin Patterson, head of retail at BT, said: “Investments rarely pay off in 12 months… There is a high degree of cost to what we offer. We are interested in growing the business in the long term.”
BT says this sum will be offset by the extra subscribers to its bundle packages and fewer customers leaving the firm.
The row overshadowed the launch of BT’s “extremely aggressive” offering of live Premier League matches, costing as little as £6.99 a month – massively undercutting market leader Sky, which creates the content.