About £350m was wiped off the value of Sky on Wednesday as investors feared the satellite broadcaster had overpaid by roughly that amount to buy most of the rights for live Premier League football.
Sky paid £4.176bn for 126 games a season, the maximum number available, compared with the £2.3bn it paid last time for 116 matches.
The three-year deal, announced on Tuesday evening, was driven by Sky’s determination to hold on to the large majority of Premier League games against competition from BT.
Shares in Sky fell by more than 2% to 933p, while BT – which paid much less per game for its own package – rose 16.2p or 3.6% to 460p.
Sky’s success has been closely linked to the rise in popularity of Premier League football and it could not afford to let its position slip as the market’s leading broadcaster of live games.
It has agreed to pay more than £11m a game, up from £7.6m. BT will pay £960m for 42 matches each season, up from £738m for 38 games. That works out at £7.6m a game under its new deal, compared with £6.5m.
The phone company became a challenger to Sky in 2012 and has used the rights to sell bundled broadband and TV packages. BT needed to maintain its Premier League coverage to sit alongside its recently won exclusive rights to the Champions League.
Roddy Davidson, an analyst at Westhouse Securities, said Sky had spent about £330m a season more than expected. He said the company needed to retain its position as the clear leader in Premier League broadcasting, but that BT had secured the better deal.
“It does look like BT has enhanced its competitive position by bouncing its arch-rival into an aggressive bid, while incurring a less dramatic 30% uplift in its own cost base in return for a broadly comparable rights portfolio, retaining a base of premiership coverage to sit alongside its Champions League rights and, maintaining flexibility to invest in other genres.”
Sky will keep its valuable Sunday afternoon and Monday night slots and will show up to 10 Friday night games, which were on offer for the first time.
