Buying sports rights is winner for BT Vision

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The chief executive of BT Vision tells Alex Wade why acquiring sports rights will be a winner for the telecoms giant and a challenge to BSkyB (LSE: BSY.L - news)

'We’re not in the business of buying everything that comes through the door,” says Marc Watson, chief executive of BT Vision. “We have a strategy, and we’re being very selective. We’re building a sustainable brand.”

Watson’s disavowal of a scattergun approach to sports rights acquisition is made from his office on the “leadership” floor of the telecoms giant. On the same day BT announced its second-quarter results . There are reasons for some cheer among investors. Although second-quarter revenues may have fallen by 2pc, to £4.4bn, cost-cutting has enabled the group to maintain full-year forecasts for earnings, and profits are up 7pc before tax to £608m.

But while the figures speak for themselves, what remains a matter for conjecture is BT Vision’s game plan. It is the division that has overseen BT’s surprising scoop for £738m of the broadcast rights to 38 live Premier League football matches from 2013 to 2016, as well as the rights to Aviva Premiership Rugby for £152m from 2013 to 2017.

Then came the announcement of more deals: French, Italian, Brazilian and North American football leagues have also been signed up by BT (LSE: BT-A.L - news) , taking its total outlay on sports rights to date to an estimated £1bn.

Last week, BT also announced a distribution deal with the Eurosport channels, which will bring tennis, cycling and snooker coverage to its customers.

Acquisition of the Premier League rights, especially, is a watershed moment in British sports broadcasting. “It’s the first time that anyone other than BSkyB has got the first pick of games sold by the [Premier League],” Watson says.

But slick as the out-manoeuvring of Sky may have been BT’s bid, let alone its victory, only became public knowledge on the day the Premier League revealed who had won its rights auction the essence of BT Vision’s vision is, to outsiders, unclear. Does it intend to supplant Sky, for example? What will it do with its range of newly acquired sports content? Are other major sports, such as Formula One, in Watson’s sights?

I should declare an interest here. Some 14 years ago, Watson and I worked together. Back then, I was Richard Desmond’s head of legal at Northern & Shell (LSE: RDSB.L - news) . I hired Watson, a barrister, to work with me on deals for OK! such as a $1m (£627,000) contract for images of Michael Jackson’s first baby.

We also dealt with the full range of legal issues arising from Desmond’s publishing and broadcasting interests. Exotic as some of those interests were, we found ourselves written about in the legal trade press in a feature headlined “Some Like It Hot”. Watson says he “learnt a huge amount from Richard. He’s a great businessman”.

Now, though, while I ply a trade as a writer, Watson is at the helm of BT Vision. At first blush, he has not changed. Always dapper he was once described by a client in his Northern & Shell years as “the best-looking man in London” Watson is trim and immaculately dressed. He is all smiles and bonhomie as we shake hands, and ebullience itself as he sets about giving me a demonstration of BT’s new YouView set-top box, which was formally launched on September 20.

“I’ve been involved in YouView since the conceptual stage,” says Watson, who joined BT in 2007.

“I wouldn’t claim ownership of it. Its (Euronext: ALITS.NX - news) development was an iterative process and very much a team effort. But I am very proud of it.” Watson flicks through YouView’s programming guide, enthusing that “users can go back in time and watch shows from last night or the week before”.

“They can record, pause and rewind live TV,” he continues. “And there’s also a search facility that allows them to find on-demand content by programme or genre. It’s early days but feedback from industry and consumers has been brilliant.”

We get to the central question. The sports rights that have landed on BT’s books are a signal of intent, but of what?

“It’s more about BT’s vision than BT Vision’s vision,” replies the 42-year-old who, prior to being headhunted

by BT, worked as a director with London-based sports rights consultancy, Reel Enterprises.

“BT operates in over 170 countries globally and has a big retail business in the UK. The UK business is the one the public knows, and it’s a vital part of the BT Group.

“Our programme of sports broadcast rights acquisition is intended to drive revenue and deliver profits for the UK business, and sport is a great way to do this. Sport really matters to people. It arouses passion in a way that other content can’t. It has a real impact on decision-making, because it creates an appointment to view.”

Watson’s appointment to view is not, though, dependent on people being tied in exclusively to BT Vision.

“We will be making our sports rights available on satellite, and we’re open to wholesaling if the terms are right,” he says. “People won’t have to swap set-top boxes or subscribe to BT broadband to watch our football matches.”

That said, the rights are intended “to drive our own platform. Subscriber numbers are currently 750,000 but we expect that number to increase significantly. We’re looking for retail relationships, which includes deals with bars and clubs, too.”

The newly created BT Sport will host two dedicated sports channels BT Sport 1, its flagship channel, and BT Sport 2. Its Premier League rights are for Saturday lunchtime, midweek and bank holiday games (and include the first game of the 2013-14 season), so these, along with English rugby games and overseas football leagues, will populate Sport 1.

“It’ll be a must-have channel for sports fans,” says Watson, while Sport 2 will be used for scheduling conflicts.

Other sports are being sought indeed, announcement of another deal is imminent, “certainly before Christmas”, Watson reveals. Could it be cricket, or Formula One? “Those rights are tied up for years to come,” says Watson. He says he can’t reveal what’s coming because “the ink isn’t dry on the contract yet”. However, market rumour suggests that tennis could be the next sport in the BT stable.

Watson reveals that BT will establish its own state-of-the-art broadcast studio. Its anchor man for football coverage is known BBC Formula One presenter Jake Humphrey.

Other hires include award-winning sports director Grant Best as senior channel executive producer. Simon Green, the chief executive of the Boxnation boxing channel, will have day-to-day control of BT Sport. Both men formerly worked for Sky.

“We’re hiring the best in the business,” says Watson.

BT Vision’s ambition is clear, but does Watson regret recent comments to the effect that BT was pleased “to own” English rugby? “I didn’t say that,” he says. “What I said was that we were pleased to own exclusively the broadcast rights , not rugby itself.” The misquotation drew much ire from the rugby community, which Watson says he fully understands.

“I’m a rugby fan. I go to Gloucester when I get the chance. We’ve put the biggest deal in rugby’s history on the table, and we want to see the game grow. We hope rugby people will greet our arrival with an open mind. I can well understand why the idea that I said I was happy to 'own’ it would cause annoyance, but our aim is to democratise sport, to make it more accessible, and do so in an innovative, entertaining way.”

Watson himself wasn’t sporty at Hull University, where he read law, but keeps in shape today through boxing, playing squash and running. As I recall from his crestfallen demeanour when, years ago, we met at Loftus Road for a QPR game, he is also a passionate Luton Town fan. Watson’s team lost 1-0, but he admits that, if the opportunity ever arose, he “would love to get involved with the club. My great-grandfather was a director at Luton in the 1950s”.

I try one last time to tease out a concrete declaration of strategy. After all, it has been alleged that BT was prepared to pay £2bn to acquire all the Premier League broadcast rights put out to tender, rather than the two of the seven bundles they obtained; that this failure has led to a “buy whatever’s available” policy to plug the gaps.

“Not at all,” says Watson. “We had a strategy, and would have bought more if the price had been right. The bottom line is that you don’t give your competitors advance notice of your strategy by telling everyone what it is.”

As we part, I notice a photograph on Watson’s desk of four footballers celebrating. They are Mal Donaghy, the Stein brothers, Brian and Mark, and Andy Dibble; the occasion is Luton’s improbable victory over Arsenal in the 1988 League Cup. “I was there,” says Watson. “It’s the greatest sporting event I’ve ever attended.”

It might be some time, if ever, before Watson gets to see his beloved Luton in the Premier League, but whether it happens or not, BT will have to ensure that its sports vision is clear.