Credit: BT

Will BT's TV gamble pay off?

The telco says it's signing up customers at a record rate, but football TV rights don't come cheap.

by Jack Torrance
Last Updated: 29 Oct 2015

It has been a good week for BT. Yesterday competition regulators provisionally approved the telecoms giant's plan to acquire Britain's biggest mobile network, EE. Today it announced it had signed up a record 106,000 new TV customers in the three months to September.

That jump comes on the back of the telco's snaffling up of exclusive rights to broadcast Champions League football, which used to be split between ITV and Sky. 'We’ve seen good demand for BT Sport Europe and this has helped us add a record number of BT TV customers in the quarter,' said its chief exec Gavin Patterson.

The three-year deal cost BT £897m, so Patterson will be relieved customers have responded well. But that's a seriously large investment to try to recoup. If, hypothetically, the 106,000 new customers were all that BT managed to drum up off the back of the deal, they would have cost £8,462 each.

But BT's strategy is more focused on the long-term, of course. As competitors like Sky relentlessly pursue more broadband customers (it signed up 130,000 new customers in the last three months), BT's position is under threat. Offering its customers a decent smattering of TV (which now includes AMC, the network that first broadcast hit American TV shows Mad Men and Breaking Bad) gives them more of an incentive to stay put.

That seems to be working. Though its group revenues were flat (up 2% on an underlying basis), this was mainly due to falling sales in its B2B and wholesale divisions. Consumer revenue was up 7%, including a 17% boost in broadband and TV sales, and it signed up 82,000 new retail broadband customers in the period.

Having EE in its stable will make BT's customer base even bigger – being able to cross-market TV and broadband to the mobile network's 27 million (!) existing customers will be extremely valuable. But then it is paying £12.5bn for the privilege (or £462 per customer, if you want to look at it that way). 

That's a lot of cash, especially when it has already spent so much on TV. In February it agreed to pay £960m for its share of Premier League TV rights and the AMC deal, along with rights to broadcast the next series of the Ashes, will have set it back a fair whack too (if not the ridiculous amounts of cash that football rights are going for).

If all this investment fails to drag in enough customers then there's a danger it could blow up in Patterson's face. But it's good that he's willing to take a punt rather than sit back and let Sky and Virgin (if not TalkTalk...) slowly chip away at BT's broadband customer base.

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