Sky (SKY) is in the hot seat ahead of next year's auction for Premier League broadcasting rights. The pay-TV, broadband and telephony provider currently pays £760m to broadcast 116 matches each season, but a bidding war with BT could leave it with a hefty bill.
Sky currently holds five of the seven rights packages, while BT owns two. BT, which outbid Sky in last year's Champions League rights auction, will be keen to obtain more top-flight football content to support its burgeoning BT Sport channel. Indeed, broker RBC Capital Markets believes BT would benefit from buying additional packages. It thinks the pair may have to shell out £3.9bn in total, or 30 per cent more than last time around.
Meanwhile, Sky's recent acquisitions of Sky Italia and Sky Deutchland have increased its debt pile and diluted its short-term cash flow and EPS. That could leave it vulnerable going into the auction. On the other hand, broker Bernstein thinks Sky may only have to pay 15 per cent more to maintain its existing match coverage, and its focus will be on its new European operations.
Broker Investec forecasts full-year pre-tax profits of £1.23bn, giving EPS of 55.9p, rising to £1.51bn and 67.8p in 2016.
