Sky and BT will ‘lose £1bn if sporting events stay shut until August’

Sky and BT will lose almost £1bn in revenue if top-flight sport remains shut down until August, according to a report that recommends players take a pay cut to support their clubs.

In England, the Premier League has postponed matches until at least 30 April, and it appears increasingly unlikely that the league will resume then as the government’s nationwide lockdown is expected to continue for months.

“The hypothesis informing governments assumes an initial three-month long lockdown,” said Enders Analysis, which published the report. “Group activities of 25 people involving close physical contact without protection will not plausibly be the first to be allowed when when some social life resumes.”

Sky has stopped charging commercial clients such as pubs that carry Sky Sports, and pay-TV subscribers can “pause” their payments. BT has told customers to call to “discuss their contract or other options”, while some customers on its flexible pay-TV package can elect to drop sport.

“Assuming a worst-case scenario of a four-month suspension of all sports coverage (British and foreign), with all sports subscribers pausing their contract and wholesale clients being allowed to follow suit, Sky would lose £700m and BT £228m in revenues,” Enders said.

The report says that beyond July Sky and BT will start saving money if sport remains off screens as upcoming rights payments would be postponed or cancelled.

Sky and BT are due to pay the Premier League the six-month licence fee for the first half of the 2020-21 season, which amounts to about £530m in total, in July. BT’s annual bill to Uefa for the Champions League rights is £394m.

The report suggests players need to play their part as clubs struggle economically, with wages accounting for 59% of revenues across the Premier League.

“Football’s cost structure is pretty simple: most of the receipts flow into players’ pockets,” the report says. “The best solution is collectively negotiated pay cuts, but negotiating pay cuts with players is as difficult as herding cats.”

One top-flight German club has reached a deal with players and another is in talks. In France, Lyon has put players on the public “temporary” unemployment scheme, which should cut pay bills by half.

“To limit disruption, pain will have to be shared across the supply chain with players’ pay first in line,” the Enders report says.

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BT ready to break with tradition to chase Netflix generation

BT is to scrap its traditional pay-TV packages and allow customers to pay for prime content such as Premier League football on a monthly basis, as it aims to keep pace with the flexibility offered by streaming services such as Netflix and Disney+.

BT has traditionally used its multibillion pound portfolio of rights, from Champions League to Premiership Rugby and boxing, to lock consumers into long-term contracts bundling TV packages with broadband and phone services.

However, the rise of streaming is dramatically reshaping viewer habits away from costly TV packages to more flexible options pioneered by players such as Netflix.

BT is to start offering a range of new flexible TV packages, such as for sport or entertainment, that customers can add, or drop, on a monthly basis.

“Being flexible is more in tune with how customers want to consume content in a streaming world,” said Marc Allera, chief executive of BT’s consumer division. “For example, the race for the Premier League title may be over in a few weeks and once that is done some viewers may prefer to spend their money on movie, or entertainment, packages. Or if families are going abroad on holiday in the summer they may want to switch off a sports subscription.”

BT’s bolt-on monthly packages run from £10 for entertainment to £40 for “Big Sport”, which includes the “best of BT and Sky Sports”. To build or change a TV package, which can be done online without the need to ring a customer service line, consumers will need to sign up for a BT broadband package for up to 24 months. Rivals usually require customers to sign up to a broadband package and a minimum basic TV package.

Allera said he hoped that the ability to so easily opt out of TV packages would not hurt the company’s profits.

“You could also see people spin-up [get more packages] given they can upgrade at will,” he said. “We have to respond to how customers want to consume TV – it is what we have to do to remain relevant.”

In December, BT launched a monthly pass to allow sports fans to watch its content without a contract for the first time. However, the new £25-a-month pass is primarily designed to attract the occasional non-BT customer. Under BT’s new strategy, broadband customers will be able to access all of its sport content for £15 a month.

Sky was first to respond to the Netflix threat by launching streaming service Now TV in 2012, offering a range of daily, weekly and monthly passes without the need for a TV subscription. The service, such as the monthly sports pass at £33.99, is primarily aimed at “pay-lite” viewers unlikely to ever become full subscribers, with pricing designed to ensure it does not damage its eight million core pay-TV base.

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