TV venture

BT in Warner Bros sports venture as divi restored

BT has announced a new JV (pic: Terry Murden)

Telecoms group BT and Warner Bros Discovery are forming a premium sports joint venture, bringing together BT Sport and Eurosport UK.

The deal will see the new entity offer sports such as football’s UEFA Champions League, the UK Premier League, Premiership Rugby, the Olympic Games, tennis grand slams and cycling’s Tour de France and Giro d’Italia.

BT will receive an initial £93m from Warner Bros Discovery and up to £540m in an earn-out from the joint venture.

The company confirmed the deal as it reported a 9% rise in profit before tax to £2bn for the year ending 31 March and the reintroduction of its dividend.

It is proposing a final payout of 5.39p per share, bringing the full year total to 7.70p per share.

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BT has also agreed a new longer-term reciprocal channel supply deal with Sky beyond 2030.

Revenue came in at £20.9bn, down 2%, reflecting revenue decline in Enterprise and Global offset by growth in Openreach, with Consumer flat for the year and returning to growth in Q4.

BT said it has achieved gross annualised cost savings of£1.5bn and increased the target to £2.5bn by the end of FY25.

Philip Jansen, chief executive, said “BT Group has again delivered a strong operational performance thanks to the efforts of our colleagues across the business.

Openreach continues to build like fury, having now passed 7.2m premises with 1.8m connections; a strong and growing early take-up rate of 25%. Meanwhile, our 5G network now covers more than 50% of the UK population.

“While the economic outlook remains challenging, we’re continuing to invest for the future and I am confident that BT Group is on the right track.

“As a result, we are today reconfirming our FY23 outlook for revenue growth, EBITDA of at least £7.9bn and also the reinstatement of our full year FY22 dividend, as promised, at 7.7 pence per share.”

Market reaction

John Moore, senior investment manager at Brewin Dolphin, said: “BT has been through a highly challenging period, but today’s results tentatively suggest there are signs of more encouraging times ahead for shareholders.

“The joint venture with Warner Bros Discovery is a potentially exciting development in a highly competitive market and continues to differentiate BT’s entertainment offering.

“Meanwhile, Openreach’s strong performance and the reinstatement of the dividend, despite the expected dip in revenues, are also positives.

“Overall, there is room for optimism, but BT’s capex commitments will likely remain a headwind in the months ahead.”

Russ Mould, investment director at AJ Bell, said: “Brave experiment or overly ambitious folly? BT’s participation in the sports rights battle has moved to a new phase as it completes its joint venture with Warner Bros. Discovery.

“BT entered the fray in 2012 by securing rights to Premier League matches and really made a splash a year later by capturing Champions League and Europa League games from under the nose of Sky. 

BT has bought into the Champions League (pic: SNS Group)

“The promise of top-level sports action was seen as a way of securing subscribers for its wider TV and broadband services.

“While this strategy may have enjoyed some success it involved hefty costs for a company which already had plenty of other demands on its cash flow and balance sheet, including upgrading infrastructure and paying out dividends.

“BT still has plenty of issues to deal with, not least the complex and costly investment in broadband infrastructure and a big pension deficit, but at least it seems to be laying the platform to address these challenges.”

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