Shares in Sky drop after huge TV bill emerges
SKY SAW its stock open four per cent down in trading yesterday after agreeing to fork out £4.1bn for the right to show live Premier League football between 2016 and 2019.
The British media giant won five out of the seven TV packages up for sale, but had to stump up 83 per cent more than it did in the last auction three years ago. Shares closed more than two per cent down.
BT’s stock, on the other hand, rose more than three per cent after it agreed to pay £960m for the two remaining packages.
The combined TV package saw the Premier League rake in £5.136bn, far outstripping forecasts. The figure paid by Sky was approximately £330m above analysts’ expectations.
William Nicholls, a dealer at London Capital Group, said: “One-nil to BT versus Sky in the share price reaction with Sky forced to empty its pockets by BT to keep the prime slots of Premier League coverage. With the total spend on rights over 25 per cent more than expected at over £5bn, the share price reaction is understandable as this could mean higher prices down the line for Sky consumers despite Sky being diplomatic and suggesting ‘efficiency savings’ would cover the increase.”
Westhouse Securities analyst Roddy Davidson agreed: “It does look like BT has enhanced its competitive position by… bouncing its arch-rival into an aggressive bid, while incurring a less dramatic 30 per cent uplift in its own cost base in return for a broadly comparable rights portfolio.”