News that BT (BT.A) has won all of the live UK TV rights to screen UEFA Champions League and Europa League matches has been predictably grim for shares in pay-TV provider BSkyB (BSY). They tumbled around 11 per cent on the news and, at 841p, are now trading well below our recent buy tip (932p, 31 October 2013).
Certainly, the move demonstrates that BT's challenge in the sports TV arena is serious and success with the Premier League auction in 2015 now looks crucial for BSkyB. BT's win may also make it harder for BSkyB to push through price increases in the longer term. But investors shouldn't be too downcast. To begin with, BT's rights don't begin until the 2015-16 season. In the meantime, it's reasonable to assume that the solid growth revealed with BSkyB's first-quarter figures last month will continue. That could be buoyed by such factors as a reviving housing market - a key time for householders to consider their TV and communications provision is when they move house. What's more, BT is paying a painfully inflated £299m a year for three years - the price tag last time was around £160m for both competitions. On that basis, BSkyB's decision to walk away could yet prove wise.
