BT unveils £633 million sport deal with Warner Bros Discovery

BT Group Plc set out a route to sell pay-TV unit BT Sport to American media giant Warner Bros Discovery Inc., cementing a reversal after its high-profile entry into football rights a decade ago.

Alongside in-line full-year results Thursday, London-based BT said it and Warner Bros. Discovery will create a new 50-50 sport TV joint venture, combining Premier League football rights with Eurosport into a new bundle that will have a single brand in the future.

BT will transfer its pay-TV operating businesses to the US firm and receive £93 million ($113 million) cash up front as well as £540 million in the future, subject to certain earn-out conditions which it didn’t specify.

Warner Bros will then get a call option to buy out BT’s interest in the business. The parties expect the deal to close by the end of 2022. Lazard advised BT on the deal.

BT introduced its sports broadcasting service in 2013 and has spent billions to win broadcasting rights to the European Champions League and English Premier League football matches.

Shares in BT rose 0.8% to 177.8 pence in early London trading.

Stable results
Chief Executive Officer Philip Jansen also deepened a years-long cost-cutting drive to take out another £500 million in costs by the end of 2025. He’s trying to simplify the group while tackling cost inflation and supply chain issues, but BT’s biggest union is threatening a strike after worker representatives rejected a pay offer last month.

French billionaire Patrick Drahi is known to be keen on cost-cutting and is circling the former British phone monopoly after building an 18% stake last year. A standstill on him launching a takeover expires next month, and he moved more money into his BT vehicle in March.

BT’s new chairman Adam Crozier, who joined in December, is also overhauling the board. Chanel CEO Leena Nair will leave after less than three years and the phone company will seek new directors, BT said.

BT reiterated forward-looking guidance of growing adjusted revenue and growing adjusted earnings to at least £7.9 billion before interest, tax, depreciation and amortization next year.

It largely hit sales and profit guidance for 2021, with fourth-quarter adjusted earnings before interest, tax, depreciation and amortization of £1.87 billion versus an estimated £1.88 billion and revenue of £5.17 billion versus an estimated £5.19 billion. Bloomberg