Analysis: BT Sport and Discovery joint venture could be ‘legitimate threat’ to Sky

Analysts from across the broadcast sector have given their views to Broadcast Sport on the proposed joint venture between BT Sport and Discovery, and whether it could be a genuine competitor to Sky Sports. 

It was announced on Thursday that the pair were negotiating a joint venture, after a possible acquisition of BT Sport by streaming platform DAZN fell through. The resulting creation from BT Sport and Discovery could hold Premier League, Champions League, tennis grand slams, cycling grand tours, Olympics, MotoGP rights, and more.

Conrad Wiacek, head of sport analysis at GlobalData, believes that the propositition could be a “legitimate threat” to Sky’s leading position in the UK sport broadcasting market: “Discovery entering into a joint venture with BT Sport ahead of an eventual purchase will not only change the shape of sports broadcasting, it is a legitimate threat to Sky’s dominant market share position in UK and European sports broadcasting. Discovery, which already owns the global media rights to the Olympic Games, is now likely to take control of one UK Premier League rights package, as well as exclusive rights to show the UEFA Champions League in the UK worth a combined $1bn (£740m) annually.

“With Comcast now owning Sky and Discovery taking on BT Sport, the UK may become the first battle ground in the US giants’ plans to become the dominant European sports broadcaster. With Sky having an established presence in multiple European territories already, and BT Sport owning the Champions League rights in the UK until 2024, Discovery will be looking to maximise subscribers through its Discovery+ platform and Olympic coverage.”

Ampere Analysis senior analyst Jack Genovese furthered this, believing that the combination of BT Sport’s premium sports rights with Discovery’s non-sports content could be a challenge to Sky as a whole in the UK: “The joint venture would likely guarantee a much bigger audience for the increasing number of rights – most licensed at regional if not global level – that Discovery has been acquiring over the course of the past few years.

“We estimate that Discovery’s annual sports spend has grown by 70% between 2017 and 2021 in the main markets where it operates. Assuming the resulting service would be available on discovery+, it might have big implications for Discovery’s OTT service, by adding a more premium rights to its current portfolio (which includes the Olympics until 2024). Ampere’s latest survey of sports fans in the UK (Q4 2021) shows that only 9% of sport fans currently have access to Discovery+, whereas 33% have BT Sport – which provides a bit of a benchmark for what a combined service could aim for.

“Finally, this deal would probably add a re-energised strong number 2 in sports in the UK, at a pivotal time for the country’s subscription video landscape.”

Discovery has agreed a deal with AT&T for a merger with the US telecommunication company’s media business, WarnerMedia (the deal has been cleared by European competition authorities, while a decision by US competition authorities is pending). Meanwhile, Sky currently has an agreement to air WarnerMedia content in the UK until 2025, but some expect this to not be renewed - allowing the launch of HBO Max in the UK.

Asked about the effects of this, Genovese added: “If, by virtue of the BT joint venture, [Discovery] should also be able to add premium sports rights to its content slate, Sky would all of a sudden face a really strong competitor across all of its content propositions, and with fewer weapons at its disposal.”

However, Landor & Fitch executive director of insights and analytics EMEA David Powell does warn that Discovery, and its sport channel Eurosport, still has some work to do: “Sky is a formidable force in sports broadcasting; it is among the top 25% of all UK brands for knowledge and trust. Using our Brand Asset Valuator metrics, Eurosport is in the bottom 50%, meaning it has a large amount of brand building to do in order to catch up.

“However, Eurosport does have an impressive selection of sporting events. The Premier and Champions League rights provide more year-round content, complementing the spikes in viewership seen during the Olympics, Tennis slams and Cycling tours.

“In an increasingly crowded sports broadcasting market, Amazon Prime and YouTube are also making big deals. Therefore Eurosport will need to be savvy about how it builds the brand to stand for something unique, and move beyond being the go-to pace for second tier sports.”

Omdia senior principal analyst Tim Westcott added that while Discovery has the opportunity to challenge Sky, it may be more interested in being a solid second - avoiding a war of increasing Premier League rights deals. He said: “Would BT/Discovery want to challenge Sky for leadership of pay TV sports? That would mean taking over key rights like the Premier League, F1, golf and cricket, and it might be more likely the JV will focus on being a solid second in the UK.”

He added on the chances of a wider challenge to Sky: “The loss of access to HBO content will be something Sky will want to delay as long as possible – especially as it has already lost the Disney movies and channels. If it eventually arrives in the UK, an HBO Max platform with HBO content, Warner Bros movies and Premier League sport will certainly be a strong proposition.

“But I’m doubtful that Warner Bros Discovery will want to get into a war of double-digit increases in Premier League rights as we saw in the past – and neither will Sky, now owned by another US company, Comcast..”