BT Sport’s time is short: DAZN eyes takeover

October 2, 2021

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3 min read

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What's going on here?

The sports streaming service, DAZN, is in advanced talks to buy BT’s sport channel. The deal would reshape the UK sports broadcasting market.

What does this mean?

BT, one of the UK’s best-known telecommunications companies, is exploring options to sell its subscription sports arm, having launched the service in 2013. While the channel has helped prevent a large number of customers from leaving its services, the bidding war for sports rights has been costly and the service has attracted relatively few standalone subscribers. Selling its sports service would enable the telecoms company to exit sports broadcasting and focus on expanding its 5G and full-fibre networks and developing new connectivity services. 

DAZN, pronounced “Dazone”, is a potential bidder. DAZN launched in August 2016 backed by billionaire Sir Leonard Blavatnik and is based in London. Since its launch, the streaming service has expanded to 200 countries including the UK. It offers subscription sports streaming services and has made its name in combat sports like boxing and UFC, as well as NFL. Since its most recent accounts for 2019 show that the start-up had revenues of $877m and income was growing at an annual rate of 75%, the company has been dubbed the “Netflix of sport”.

A company may want to acquire business services from another for a number of reasons. In this case, if DAZN acquired BT Sport, it could allow DAZN to expand geographically into new consumer markets, reduce its competition and open itself up to further opportunities, such as acquiring English Premier League rights.

What's the big picture effect?

Despite being founded in London, DAZN has a smaller footprint in the UK than in North America, and so a deal would “significantly expand” DAZN’s reach in Britain and could even hand the company rights to Premier League matches, according to the Standard. Executive Chairman of DAZN, John Skipper, has stated that “[t]he UK is a logical DAZN market”, due to the importance of boxing, tennis and football amongst UK viewers. 

Rights to the English Premier League would be a huge opportunity for DAZN to acquire.  According to its website, 70% of the UK population watched the Premier League during the 2019/20 season. DAZN’s Chair and former Disney and TikTok Executive, Kevin Mayer, recently hinted that the company was interested in buying such football rights. “I would love to see the Premier League on DAZN in the future… it’s a huge market, incredibly popular sport, high quality experience, of course we’d want that”, he stated. BT Sport also currently holds the rights to a host of other sporting events in the UK such as the Champions League, Europa League and the Gallagher Premiership rugby.

In terms of reducing competition, any sale of BT Sport would bring an end to BT’s ambitions to compete with Sky in the paid TV market after ten years of “rampant competition” between the two. A deal would instantly make DAZN one of the biggest sports broadcasters in the UK.

Despite the opportunities, hurdles may be faced in the acquisition process. Negotiations over price (which could be in the region of hundreds of millions of pounds), and a licensing agreement between the two companies could still be sticking points. A sale may also require approval from the Premier League itself, as BT Sport is a major rights holder, and such contracts would usually include a change of ownership clause. The sale is further complicated by a cross-licensing deal that BT has with Sky, meaning that Sky must approve any such deal. 

Whether a sale will occur or not, DAZN seems to be one to watch out for as an emerging threat in the telecoms industry. It recently outbid Sky Italia for the rights to broadcast Serie A games as part of a €2.5bn deal, and shares in BT jumped by 2.7% after reports that the streaming service had bid for BT Sports. What can it achieve next?

Report written by Hannah Parker

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