For years, Sky has had a stranglehold on subscription television.
Sure, cable (in its various guises) has tried to eat away at this dominance and there was a feeling that Freeview could potentially compete with Sky. However, neither has really made a significant dent into Sky’s dominance and it remains the King of the Castle.
Furthermore, the idea of splitting the rights to Premier League football seemed to be a good one. It would create competition and provide consumers with more choice, since Sky’s dominance of subscription TV seemed to be linked to it being the home of Premier League football.
However, the likes of Setanta Sports and ESPN could do little to dent Sky’s dominance, with the former ending up going bust as a result of the onerous cost of buying the rights to live football.
Now, though, BT (LSE: BT-A) (NYSE: BT.US) seems to be making inroads into Sky’s dominance and, in my view, market sentiment seems to be swinging in its favour.
For instance, it was recently revealed that the first live Premier League match shown exclusively by BT was watched by a peak audience of 764,000. This is a very respectable start to the company’s Premier League journey and, when it is remembered that the match shown was a Saturday lunchtime kick-off, the figure looks even better as Sunday afternoon fixtures tend to draw a bigger audience than Saturday lunchtime matches.
Indeed, viewing figures were ahead of ESPN’s effort from last season, which attracted a peak audience of 713,000 people, and only just shy of the equivalent match shown by Sky last season, which attracted a peak audience of 843,000 viewers. Furthermore, the figures do not include hundreds of thousands of people who watched the game on BT over the internet or via an app.
Such a positive start seems to have been well-received by the market and, with BT shares not looking particularly expensive, I think there is potential for upside.
BT currently trades on a price-to-earnings (P/E) ratio of 12.1, which compares favourably to the FTSE 100 on 15 and the telecommunications industry group on 12.5. If viewing figures continue to be buoyant and are welcomed by the market, then I think it could lead to an upward re-rating of the shares.
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> Peter does not own shares in BT.