BT Sports moves to Discovery as joint venture proceeds

BT Group will transfer BT Sport’s operating business to Warner Bros Discovery as part of a joint venture that BT Sport will combine with Eurosport in the UK.

It was reported that Discovery and BT Group were in exclusive discussions in February, and today (May 12) the two companies announced that they had reached an agreement on terms to form a 50/50 joint venture.

Under the contract, BT will receive £93m from Discovery and up to £540m from revenue from JV, which must meet certain conditions. After the transfer, BT Sport becomes a wholly-owned subsidiary of Discovery.

As part of the transaction, Discovery will add an opportunity to exercise a call option to purchase BT’s interest in JV at a price determined at the time, plus any remaining consideration and revenue BT may be entitled to.

However, Discovery is not required to proceed with this option, otherwise BT may liquidate its stake through a sale or IPO.

A call option can be exercised at any point in the first four years of the JV.

According to the statement, BT Sport and Eurosport UK’s sports content offerings include JV’s UEFA Champions League, UEFA Europa League, Premier League, Premiership Rugby, UFC, Olympic Games, Tennis Grand Slam, Cycling Grand Tour and Winter Sports World Cup season.

Customers who access BT Sport directly through BT, and most BT TV customers, will receive Discovery+ as part of their existing subscription.

JV will also sign a new contract with Sky after 2030 to distribute combined sports content.

Initially, the BT Sport and Eurosport UK brands will remain, as well as separate product offerings, but in the future it is planned to consolidate them into a single brand.

BT Group and Discovery can distribute combined sports content to new and existing customers on their respective platforms and apps.

BT Group launched BT Sport in 2013 to attract broadband customers it had lost to rival Sky.

It succeeded in surpassing 3.5 million subscribers in 2016 by acquiring broadcasting rights for the Premier League (shared with Sky Sports and Amazon Prime) and the Champions League. By 2021, it will drop to 1.6 million.

The telecommunications company has been talking to potential suitors for its sports business for over a year, including sports streaming service DAZN.

Discovery acquired Eurosport in 2014 and its TV and online properties now have over 50 million monthly viewers.

Marc Allera, CEO of BT’s Consumer Division, said: “Warner Bros Discovery, a global sports and entertainment broadcaster, is the perfect partner to work with us to take BT Sport to the next level of growth.”

Andrew Georgiou, President and Managing Director, Warner Bros Discovery Sports Europe said: “We are excited to offer our fans a new premium sports product that combines everything they love from BT Sport and Eurosport UK.”

The statement detailed that as of 31 March 2022, the total asset value of the BT Sport business to be donated to the JV and the operating business value of BT Sport were £339m, with an operating loss of £222m.

Meanwhile, As of 31 March 2022, the total asset value of Eurosport UK’s rights and distribution agreements was £12 million directly to the JV and operating profit was £16 million.

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