DCSIMG

Market watch: Analysts anxious over cost of BT’s television battle with BSkyB

  • by KIRST DORSEY AND ANNABELLE DICKSON
 

FIGURES this week will shed further light upon the extent of the inroads being made by the beefed-up BT Vision into Sky’s dominance of UK market for paid television.

BSkyB’s half-year results on Thursday will be followed by third-quarter numbers from BT on Friday. Both will reveal how many customers they signed up for their TV services in the past three months.

BT has been investing heavily to boost its presence in the so-called “triple play” market for combined packages of tele­phone, TV and internet services, starting with last year’s £738 million splurge on 38 live English Premier League matches from 2013. The group also has rights to club rugby, and this month sealed a four-year deal with the Women’s Tennis Association.

BT has been bringing other programmes on to its platform too, having recently signed a deal with Viacom to add Comedy Central, MTV and Nickel­odeon to its line-up of entertainment channels.

One analyst noted that BT’s interest payments were now costing more than its dividend pay-out, while free cash flow fell into negative territory last year. He said: “It’s a huge investment that could yield substantial rewards, but if they get it wrong they’ll be crushed by debt.”

BT added 21,000 customers to its TV service in the second quarter, trumping rivals Virgin Media and BskyB. The latter added 20,000 customers during the same period.

BSkyB remains the dominant player in the market with a TV subscription base of more than 10.5 million households. BT Vision, by contrast, has about 750,000 TV customers.

“There would have to be something huge in next week’s figures before you could say there has been any dramatic shift, and I don’t expect anything on that sort of scale,” the analyst added. “This is more of a long-term story.”

High oil prices are expected to narrow falls in profits at oil giant Shell on Thursday.

The City predict fourth-quarter profits will be 3 per cent lower at $6.3 billion (£4bn), down from $6.5bn in the same period last year. Profits had fallen by 15 per cent in the previous quarter due to “volatile” energy markets.

 
 
 

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