BT in sports talks with Discovery as profit drops

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BT said it was in talks with Discovery of the US about forming a sport broadcasting joint venture as the company reported a 3% drop in profit for the first nine months of the year.

Pretax profit for the nine months to the end of December fell to £1.54bn from £1.59bn a year earlier as revenue declined 2% to £15.68bn. Adjusted revenue fell 3% and BT said it expected adjusted revenue to fall 2% for the full year.

The FTSE 100 group said it was in exclusive discussions to combine its sports business with Discovery's Eurosport UK operation to forge a 50/50 joint venture. The companies are aiming to complete talks in the first quarter for the new company to become operational later in 2022.

BT's sports unit broadcasts English Premier League and European Champions League in competition with Sky. The company launched the business to defend its broadband service against Sky, which offered free broadband to sports subscribers.

The company was in talks to sell the business to DAZN, a sports streaming service owned by Leonard Blavatnik, but those discussions stalled. On Thursday BT also announced an agreement in principle with Sky for a new reciprocal channel supply deal lasting beyond 2030.

Marc Allera, chief executive of BT's consumer division, said: "The proposed joint venture with Discovery would create an exciting new sports broadcasting entity for the UK and would act as a perfect home for our BT Sport business."

BT said revenue declined in the first nine months because of pressures at its enterprise and global divisions, partly offset by growth at Openreach, which operates the UK's telecoms infrastructure. It blamed Covid-19 and supply chain problems for the expected drop in annual adjusted revenue.

BT shares fell 3.2% to 189.18p at 08:38 GMT.

Ben Barringer, an analyst at Quilter Cheviot, said :“BT’s numbers were a little disappointing this morning, and guidance was reduced a little. However, there were two positive developments relating to BT Sport. The first is the fact that it looks like BT will enter a joint venture between BT Sport and Discovery’s Eurosport UK, which will consolidate the footprint of sport in the UK.

"Second, BT has entered into another reciprocal wholesaling agreement with Sky for sports coverage until 2030. This will continue to ease the cold war between the two providers considerably and in doing so save money for BT.”