New Premier League TV deal fails to boost Sky shares

<p>Sky saw a 2.2 per cent in shares after securing a new Premier League TV rights deal.</p>

Sky saw a dip in its share price on Wednesday (February 11th) despite securing a new deal to broadcast Premier League football matches.

The British company's share price closed 2.2 per cent down after it announced a huge £4.1 billion deal to show top flight football between 2016 and 2019. Sky secured the lion share of the seven TV packages on offer but paid 83 per cent more than it did after the last auction in 2012. It was a different story for rival BT which saw a 3.65 per cent increase in shares.

In what is the largest deal in Premier League history, Sky and BT paid a combined £5.136 billion to have the rights to screen 168 matches during the course of a season. Analysts have described Sky's drop in share price as being "sobering" but were upbeat about the "reassuring" results for BT.

Richard Hunter, head of equities at Hargreaves Lansdown, said: "Sky has paid dearly and is going to have to squeeze costs and customers to keep its finances on track.

"BT has ended up with a good hand – Premiership, Champions League, FA Cup and European leagues, all for a fraction of the annual cost that Sky is paying for its Premiership position."

Sky dominance under threat?

This new deal represents Sky increasing its hold over the Premier League but there have been suggestions that competitors are finally starting to challenge the broadcaster's dominance. While Sky has seen off the likes of ITV Digital and Setanta Sports in the past, BT Sport is proving a much more sustainable rival.

In November 2013, BT won the right to screen all Champions League and Europa League football matches from 2015. It has been seen as a major coup for the company and took the coverage away from Sky and ITV which shared the coverage.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.