As football fans wait for the World Cup to start, BSkyB (BSY) and BT Group (BT.A) have already advanced to the next stage of their own competition. In a bid to counter telecoms giant BT's successful BT Sport channel, pay-TV titan BSkyB is launching Sky Sports 5, a dedicated European football channel.
BSkyB's goal is to be a 'triple-play' provider of TV, broadband and telephony, so it's offering two years of free broadband to Sky Sports 5 subscribers. It's probably hoping the move will stall BT's recent momentum in TV and broadband - BT added 170,000 retail broadband customers in the quarter ended 31 March, or nearly four-fifths of the market's net additions, and BT Sport has reached five million homes in a year.
The pair's fierce rivalry may concern investors though, as it may drive them to a price war and overspending on sports rights, depressing profit margins. BT spent nearly £900m to beat BSkyB for the Champions League broadcasting rights in 2015-16, and may well bid for the Premier League rights later this year. Meanwhile, BSkyB's average revenue per user of £571 last quarter was almost flat year-on-year, and offering free broadband could depress it further.
