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Sky shares fall after Premier League TV rights deal | Sky shares fall after Premier League TV rights deal |
(35 minutes later) | |
Sky's shares have opened more than 4% down after it agreed to pay £4.1bn to show live Premier League football between 2016 and 2019. | Sky's shares have opened more than 4% down after it agreed to pay £4.1bn to show live Premier League football between 2016 and 2019. |
Sky won five of the seven TV packages on offer, but paid 83% more than it did in the last auction three years ago. | Sky won five of the seven TV packages on offer, but paid 83% more than it did in the last auction three years ago. |
However, shares in BT rose more than 3% after it paid £960m for two of the TV packages, 30% more than last time. | However, shares in BT rose more than 3% after it paid £960m for two of the TV packages, 30% more than last time. |
Analysts at Jeffries said the outcome had been "sobering" for Sky, but "reassuring" for BT. | Analysts at Jeffries said the outcome had been "sobering" for Sky, but "reassuring" for BT. |
Sky and BT paid a combined £5.136bn for the live TV rights deal - far in excess of what had been expected. | Sky and BT paid a combined £5.136bn for the live TV rights deal - far in excess of what had been expected. |
Jefferies said the deal would be "challenging to explain" to Sky shareholders. | Jefferies said the deal would be "challenging to explain" to Sky shareholders. |
"For Sky a sobering result," Jefferies said. "Even with some claw back on costs/pricing, we expect [analyst] forecasts to move lower," it said. | "For Sky a sobering result," Jefferies said. "Even with some claw back on costs/pricing, we expect [analyst] forecasts to move lower," it said. |
The price Sky paid per year was about £330m more than City analysts had predicted. | The price Sky paid per year was about £330m more than City analysts had predicted. |
Jeffries estimated that Sky would try to claw back about £200m per year through cost cutting, and £100m through incremental price rises. | Jeffries estimated that Sky would try to claw back about £200m per year through cost cutting, and £100m through incremental price rises. |
Richard Hunter, head of equities at Hargreaves Lansdown, said BT appeared to have got the better deal. | Richard Hunter, head of equities at Hargreaves Lansdown, said BT appeared to have got the better deal. |
"Sky has paid dearly and is going to have to squeeze costs and customers to keep its finances on track," he said. | "Sky has paid dearly and is going to have to squeeze costs and customers to keep its finances on track," he said. |
"BT has ended up with a good hand - Premiership, Champions League, FA Cup and European leagues, all for a fraction of the annual cost that Sky is paying for its Premiership position," he added. | "BT has ended up with a good hand - Premiership, Champions League, FA Cup and European leagues, all for a fraction of the annual cost that Sky is paying for its Premiership position," he added. |
'Entertainment industry' | 'Entertainment industry' |
Premier League chief executive Richard Scudamore told the BBC Radio 4 Today programme that clubs reinvest TV rights money, "making sure the show stays as compelling and as interesting as it is". | Premier League chief executive Richard Scudamore told the BBC Radio 4 Today programme that clubs reinvest TV rights money, "making sure the show stays as compelling and as interesting as it is". |
He said that money ultimately gets "redistributed right down through grass-roots football". | He said that money ultimately gets "redistributed right down through grass-roots football". |
Although only about 5% of Premier League funds eventually filter down to grass-roots level, Mr Scudamore said he was not in a position to guarantee that the 70% rise in the price of TV rights would be reflected in funding for grass-roots football. | Although only about 5% of Premier League funds eventually filter down to grass-roots level, Mr Scudamore said he was not in a position to guarantee that the 70% rise in the price of TV rights would be reflected in funding for grass-roots football. |
He said it did not make him uncomfortable that Premier League footballers earn up to £500,000 per week, or that clubs employed some staff on the minimum wage. | |
"The reality is, just like in the film industry, just like in any talent industry, just like in the pop music industry, the talent, the absolute talent... gets paid a disproportionately high amount compared with other people that work in the business." | "The reality is, just like in the film industry, just like in any talent industry, just like in the pop music industry, the talent, the absolute talent... gets paid a disproportionately high amount compared with other people that work in the business." |
"We're in the entertainment industry," he added. "The stars that grace the fields of football in the Premier League are world stars, it's a world market, and I don't set that market rate. It's set by the entire world market, and we, and the fans, want the best talent to come and play in the Premier League." | "We're in the entertainment industry," he added. "The stars that grace the fields of football in the Premier League are world stars, it's a world market, and I don't set that market rate. It's set by the entire world market, and we, and the fans, want the best talent to come and play in the Premier League." |