BT Sport is ready to consummate the marriage to Warner Bros. Discovery it announced in February. The two are embarking on a mission to deliver a “premium” sports channel to the British and Irish betting markets.
Warner Bros. Discovery and BT Group have signed an agreement to merge their two sports channels, Eurosport and BT Sport, through a joint venture. Once the deal closes, both companies will create a joint pay-TV sports channel, which will bring together the rights to the Premier League, the Champions League, and the Olympic Games, among others, according to the Financial Times.
Warner Bros. Discovery may pay BT up to £633 million (US$773.9 million) for the deal. Of this, the company will pay £93 million (US$112.72 million) in installments over three years. Another £540 million (US$660 million) is contingent upon the successful performance of the operation for the first four years.
The venture will be 50% managed by the two companies. However, Warner Bros. Discovery has the option to acquire full control of the chain in the future. If it decides not to, BT will have the ability to exit its stake in the joint venture through a sale or an initial public offering.
The Premier League and the Champions League have to sign off on the merger before it can be finalized.
Making a Global Splash
Last February, BT began talks with Discovery to merge BT Sport with Eurosport. For the time being, the sports channels of the two chains will continue to operate separately in the UK market until the deal becomes official.
Discovery entered the global sports media business in 2014 with the acquisition of Eurosport. Today, its sports business, under the Discovery Sports brand, produces and distributes content to 130 million unique people per month. It covers over 200 markets and 20 languages outside the US.
Discovery Sports’ consumer brands include Eurosport, Global Cycling Network (GCN), Global Mountain Bike Network (Gmbn), Golf Digest, and GolfTV powered by the PGA Tour. Additionally, it includes sports programming and content on Discovery+ and Discovery’s free-to-air television networks in Europe.
BT Group is a UK telecom operator serving customers in 180 countries. Its main activities in the UK include the provision of fixed voice, mobile, broadband, and television products. It also has a range of products and services via fixed and mobile networks for consumers, businesses, and public sector customers.
BT Looks For New Growth
At the end of its most recent fiscal year, BT reported that its revenue decreased by 2.2%, falling to £20.85 billion (US$25.48 billion). At the same time, it recorded a net profit of £1.27 billion (US$1.55 billion). This represents a drop of 13.4% below the prior year result.
As a result, the operator confirmed its revenue growth outlook for the current fiscal year and is showing optimism. It expects EBITDA (earnings before interest, taxes, depreciation and amortization) of at least £7.9 billion (US$1.04 billion) and the reinstatement of the annual dividend for fiscal year 2022. If that holds up, stakeholders will receive £0.08 (US$0.098) per share.
BT sees methods to achieve its goals. It recently increased its cost savings target for 2025 by £500 million (US$610.25 million) in order to improve its financial position. That goal is now £2.5 billion (US$3.05 billion).
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