Is Britain’s favourite head girl, Clare Balding, in danger of compromising her status as the nation’s number one television presenter (male or female) as a consequence of over-exposure?
Turn on your TV and she’s everywhere at the moment, her talents recognised by producers who appreciate that her affable, professional presenting style is underpinned by hard work and comprehensive research.
Last week, BT announced that it had signed Ms Balding to front her own talk show on its new sports channel.
She becomes the latest asset in the telecom giant’s impressive armoury as it endeavours to establish itself as a serious rival to BSkyB.
This latest marquee signing highlights just how determined BT is to make its TV offering work (the channel officially launches this summer) and how central sport’s role is in attracting new broadband, phone and TV customers.
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Aside from securing Ms Balding’s signature, BT has agreed deals to screen live Premiership rugby and is believed to be in discussions regarding the sponsorship and screening of 海角视频 Athletics.
BT’s biggest financial commitment, however, is its three-year deal with the Premier League. The company is spending £246 million a season to screen 38 live matches from 2013-14.
This is a massive commercial undertaking, but the company has, to a great extent, mitigated the risks despite a forecast £100 million reduction in earnings (or EBITDA to be accurate) and a £200 million fall in free cash flow (operating cash flow minus capital expenditure).
Not only is BT big enough to absorb such an impact on its balance sheet, the company says free cash flow will return to normal by 2014-15 – that’s around £2.5 billion – while its dividend and share buy-back programme remain unchanged.
In fact, last week, the company confirmed plans to increase its annual dividend by between 10% and 15% a year.
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Utilising popular sport as a means of first engaging with viewers and subsequently cross-selling other products to them is a well-established modus operandi first used successfully by French broadcaster Canal+.
The City is certainly happy with what BT is doing – the company’s share price has risen by more than 30% following the announcement of last June’s Premier League deal.
However, we should not expect BSkyB simply to stand aside and allow BT to loosen its grip on Premier League football without a fight.
The company, 39% owned by Rupert Murdoch’s News Corporation, is renowned as a fierce competitor and while it was annoyed at paying around 40% more (£2.28 billion) for Premier League rights than it had previously, wrongly assuming it was bidding against the Gulf-based broadcaster, Al Jazeera, it was determined to pay whatever it took to secure the rights which remain central to its business success.
Moreover, BSkyB executives have long anticipated contending with a rival capable of spending colossal sums of money in the pursuit of expensive sports rights and last week, as it reported half-year turnover of £3.53 billion and an 8% increase in pre-tax profits of £642 million, the company announced another initiative designed to generate more money from its existing 10.7 million subscribers.
Having invested heavily in new technology, from this summer the company plans to start tailoring commercials to users depending upon where they live.
The move is one of several it plans to implement now that BT has committed itself to making sport central to its growth.
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What makes BT different is that, unlike BSkyB’s earlier competitors, it’s profits are not reliant upon immediately selling football content to as many subscribers as possible in order to make the rights deal work.
BT is in for the long haul and can secure longer-term profits and customer subscriptions provided its football, rugby and other sports deals drive growth in its broadband customer base.
In the medium term, it makes commercial sense for BT to use football content to drive the take-up of other services, particularly as it already boasts more than 6.2 million broadband customers.
In other words, BT is not a competitor BSkyB can see off as easily as say, ONDigital or Setanta, companies weighed down by balance sheets considerably weaker than that of BT.
BSkyB is, therefore, keen to both protect an impressive existing subscriber base, (each subscriber is worth an average of £568 a year to the broadcaster) and to attract new paying customers.
The company’s Sky Go offering, for example, allows users to access content on tablet devices and mobile phones.
So popular has this proved that in the final week of January, the company began charging £5 a month for a premium version of the service.
Perhaps most significantly, Sky Go enables users to stream live sports content over the internet. This proved particularly successful when Arsenal played Liverpool last week and an astonishing 264,000 football fans paid to watch the match on their tablet devices or laptops.
A number of broadcast analysts believe that between now and the end of the football season, BSkyB will stream up to one match a week via its Sky Go platform, giving it a distinct commercial advantage prior to BT’s official sports channel launch.
The belief is that if it can attract say, 100,000 short-term subscribers per game, it can then offer them heavily discounted subscriptions to its sports channels for a limited period, so spoiling BT’s anticipated advertising campaign designed to attract new subscribers.
This fascinating scrap to become an integral part of the national sporting fabric will continue for some time as each party appreciates sport’s longer-term value to its respective business.
At this stage, neither wants to engage in a price war, but for those of us paying to watch live sports, it seems likely that as the broadcast sports subscription market becomes ultra-competitive, the chances are we’ll end up getting a lot more for our money.
With all due respect to our head girl, this doesn’t necessarily mean much more of the fabulous Ms Balding.