UK pay TV operators fight surrogate war in broadband camp - TvTechnology

UK pay TV operators fight surrogate war in broadband camp

A price war looks set to break out in UK pay TV, but the first battle, at least, will take place in the broadband arena.
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A price war looks set to break out in UK pay TV, but the first battle, at least, will take place in the broadband arena.

This is because the opening gambit came from incumbent Telco BT announcing that its premium sports content would be given away free to subscribers of its broadband service. This immediately threatened the broadband customer bases of the other big broadband providers — DTH operator BSkyB, cable company Virgin Media and ISP Talk Talk.

These are all pay-TV providers, and all are reluctant to cut the price of their programming bundles, but they are under pressure to respond over broadband. Many of their subscribers take both broadband and TV (all of them in the case of BT and Talk Talk), since a wired connection is a prerequisite for the service (although Sky users without a BT broadband connection can subscribe to the standard definition version for £12 per month, or HD version for £15). But, Sky and Virgin Media have a number of broadband-only subscribers who may be enticed over to BT if they get access to premium sports bundled in for nothing. BT’s plan is then to lock them in with attractive double- or triple-play bundles.

BT has been signing up premium sports rights over the last two years, with the most significant move being its acquisition in May 2013 of rights to 38 EPL (English Premier League) football matches for the three seasons 2013/2014 to 2015/2016, for which it paid £738 million ($1.1 billion). Sky still has the biggest EPL package, having paid £2.3 billion for 116 matches per season over the same three-year period. This led a Sky spokesperson to argue that BT’s move into EPL was no greater a threat than had been posed by previous failed offerings from Setanta Sports or ESPN. BT Sport has bought the rights to ESPN in the UK and will broadcast games from the English football FA Cup and the Europa League.

This argument by Sky, however, is fatuous, since neither ESPN nor Setanta had a broadband offering and so posed no threat to Sky’s base there, and were not giving the content away free. Furthermore, BT has amassed an all-round sports portfolio, which, although still considerably smaller than Sky’s, may well be enough to satisfy second-tier sports junkies attracted by its being effectively free, given that broadband access has become virtually a social necessity.