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Wednesday, 14 June, 2000, 18:50 GMT 19:50 UK
TV giants gamble on sport

The one game all television executives want to play is football rights.

News that BSkyB is to pay 1.1bn for the rights to continue to show 66 live Premier League football games comes as no surprise.

Its live sports coverage has driven the growth of its subscriber base and some analysts fear its business could crumble if it lost these rights.

More television companies hope to repeat BSkyB's trick of boosting subscribers through sport. Cable operator NTL paid 328m to show pay-per-view games, in the hope that it would boost its revenues.

Sports subscribers

With the proliferation of new television channels as a result of digital technology, the battle is heating up to give viewers a reason to subscribe.

For many, sport is the answer.

Other contenders for the rights included ONdigital, the digitial terrestrial television joint venture owned by Granada and Carlton, plus Pearson and Telewest.

The current shape of TV football coverage was largely forged in 1992, when Sky won the right to broadcast Premier League matches live for five years.

The Premier League games have driven uptake of the Sky service, which now boasts more than 4.2 million direct-to-home subscribers.

NTL's gamble is that it can repeat BSkyB's success. If so the 328m price tag will have been worth it. The company is backed by France Telecom and Microsoft.

While cable operators have not enjoyed the same success as satellite broadcasters, NTL hopes its sports coverage will encourage people to take up their service.

The principal loser of the rights deal is the BBC, which has now lost its final piece of Premier League coverage, the highlights packages, to commercial rivals.

The belief in the importance of sports coverage to their future has also prompted many media companies to take stakes in football companies.

In the past week NTL has announced mutli-million pound investments in Leicester City and Glasgow Rangers.

No price too high?

In the last round of negotiations for soccer broadcast rights for 1996, BSkyB paid 670m for a four-year package of 60 live games per season to run until the 2000/2001 season.

When ITV made a similar deal for live football in 1988, the figure was just 44m.

With Sky's high subscriber base, it can probably justify the 1.1bn price tag.

But there have been doubts in the City about the economics of the deal.

Although the company's shares closed up 81p at 1225p on Wednesday, they have still lost more than a quarter of their value in a matter of weeks.

On the evidence of what analysts said prior to the announcement, it looks like many will be buying back in to the shares on Thursday.

"If they pay less than 1.2bn and win it, we will be buying the shares. If they pay substantially more, we will be back sharpening our pencils, but if they lose them altogether we will watch the shares dive," Mathew Horsman, research director at Investec Henderson Crosthwaite said earlier on Wednesday.

This was one game which the commercial players could not afford to lose.

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14 Jun 00 | FA Carling Premiership
BBC loses Premier League rights
08 Jun 00 | Business
NTL buys Leicester City stake
25 Jan 00 | The Economy
Broadcasters battle for football
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