BSkyB promotions to target BT Sports launch

BSkyB will hit back at BT with new pricing promotions as double-digit percentage increases in the cost of key sports rights kick in, in the wake of BT launching its own sports channels in the UK, according to analysts.

Morgan Stanley issued a report following UK telco BT launching BT Sports yesterday and said that increased competition for English Premier League rights will increase their cost by about 15% when they are net up for grabs in 2015.

The investment bank expects BT Sports to have 4-to-5 million subs when that rights deal is up for renegotiation.

It said that News Corp.-backed Sky is likely to offer new promotional pricing to retain and attract new customers, but is unlikely to permanently slash prices for its basic broadband service, which is still cheaper than that of BT. The extra competition will restrict Sky’s ability to hike prices across its broadband and basic TV services the bank added.

The financial impact, assuming Sky sheds some broadband and basic TV subs to BT and is forced to increase its marketing spend, are potentially in the £75-100 million (€89-118 million) range in its 2015 financial year, according to Morgan Stanley. That equates to about 5% of its EBITA profit.