Sky extends HBO deal as battle with BT intensifies

BSkyB has turned the screw on rival BT after signing a fresh deal to gain exclusive access to US producer HBO’s catalogue, which includes blockbuster shows such as Girls and Game Of Thrones.

Sky has tied up a long-term deal with HBO, maker of hit series such as Game of Thrones. Picture: Contributed
Sky has tied up a long-term deal with HBO, maker of hit series such as Game of Thrones. Picture: Contributed

The agreement – extending an existing partnership – was unveiled yesterday as the satellite broadcaster hailed “explosive growth” in its on-demand TV service and a surge of more than 40 per cent in the take-up of products over its Christmas quarter.

The new HBO deal, which runs for five years, forms part of efforts by BSkyB to broaden its offering after BT muscled in on its traditional stronghold of sports coverage last year.

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The extended output agreement means that new HBO programmes, including the True Detective drama starring Woody Harrelson and Matthew McConaughey, will premiere exclusively on the Sky Atlantic channel.

Sky also said it had secured a string of long-term rights deals in six sports, including the next rugby tour to New Zealand by the British & Irish Lions and Scottish cup football.

The broadcaster, whose biggest shareholder is Rupert Murdoch’s 21st Century Fox, was left reeling after losing out in November on the UK rights to show Champions League and Europa League matches to BT, which paid almost £900 million for the deal.

Jeremy Darroch, chief executive of BSkyB, said the group was not prepared to pay over the odds for the rights, saying it believes there are “better ways to invest for our customers”. He declined to reveal the cost of the deal with HBO, which is owned by Time Warner, but reports have suggested a figure of around £275m.

An advertising campaign fronted by Absolutely Fabulous star Joanna Lumley helped the firm notch up five million customers for high definition TV in the quarter to 31 December, while it saw a record one million connected Sky+HD boxes added in the three months – nearly 11,000 a day.

However, higher sports rights and content investment costs weighed on half-year underlying operating profits, down 8 per cent to £595m, although this was ahead of market hopes.

Citi analysts said that the exclusive HBO deal calmed concerns that BT’s ambitions would widen from sport to include movie and entertainment content.

“With one of the main rights packages tied up until 2020, this is now less likely, or at least more challenging,” the analysts noted.

Sky gained an additional 110,000 broadband internet customers in the final three months of 2013, despite the challenge from BT, which launched its own sport channels last August offering free top-flight football if customers sign up to a broadband package.

An update from BT, due today, will be watched closely for signs of how the firm has been benefiting from its push into content.