BT Group forms a new premium sports joint venture with Warner Bros. Discovery and BT Sport

JV to rebrand into single entity

BT Group and Warner Bros Discovery have announced a new joint venture (JV) that will provide viewers in the UK and Ireland with access to both broadcasters’ content. Going forward, both products will be rebranded under a new identity.

Following its announcement of exclusive discussions on 3 February 2022, BT Group has agreed a set of definitive agreements with Warner Bros. Discovery to form a 50:50 joint venture company to create a new premium sport offering for the UK and Ireland and to transfer the operating businesses of BT Sport to Warner Bros. Discovery.

“It’s not about swapping one for the other or replacing one with the other. It’s actually additive; we’re adding rights and we’re adding capability and we’re adding the strength of two global companies around what we’re doing and that is of increased value”

Speaking in a press conference, Andrew Georgiou, president and managing director, Warner Bros. Discovery Sports Europe, comments: “Warner Brothers Discovery will take on the operating control and day-to-day functions of the joint venture. As part of that, the BT Sport team, who’ve done a fantastic job in building what is a premium sports product in the UK market, will join our team and we’ll have one single team operating all platforms across both the Eurosport UK business and the BT Sport business.”

By bringing together the sports content offering of both BT Sport and Eurosport UK, the JV will have an extensive portfolio of premium sports rights including UEFA Champions League, UEFA Europa League, the Premier League, Premiership Rugby, UFC, the Olympic Games, tennis Grand Slams featuring the Australian Open and Roland-Garros, cycling Grand Tours including the Tour de France and Giro d’Italia, and the winter sports World Cup season.

Those customers who access BT Sport through BT directly, and the majority of BT TV customers, are set to now receive discovery+, the entertainment streaming service which is home to Eurosport’s live and on-demand streaming offer in the UK and Ireland, as part of existing subscriptions.

Continues Georgiou: “We have to go through regulatory approval and so until that happens, we’re not really at the start line and that’s our next focus. But once that happens, then what will happen in the marketplace is pretty simple. Eurosports, UK and BT sports will remain as is for a period of time in what I call phase two. Then beyond that, we plan to bring the sports content from both businesses into a single new brand that we will launch into the marketplace.”

Single new brand for bigger service

On the coming single new brand, Discovery Sports senior vice president of content and production, Scott Young, says that following on from Warner Bros.’ recent announcement in March that it is going to combine Discovery+ and HBO Max content into a single product, he expects BT Sport to become part of that proposition.

“To the average punter on the high street, who is Discovery? No one’s really heard of Discovery and more to the matter, Discovery+. So what’s the branding of this entity going to be? And that’s crucial to the future of this venture”

Young explains: “As we evolve over time, bringing the BT Sport and Eurosport UK content onto the same product is a really compelling consumer proposition because we have got a lot of fragmentation and we are saying to the consumer, actually, this is one product where you can get a lot of great genres of content in one place that can satisfy very many different members of every household.

“I think that is a really big winning formula for us. So that is really exciting,” Young notes.

On whether BT Sport should be concerned in any way that the brand loyalty and recognition the broadcaster has in the UK will be undermined by the new Discovery brand, which is less widely recognised in the country, BT Sport chief operating officer, Jamie Hindhaugh, says a resounding “no”, while Georgiou says: “I think consumers are going to get a better value proposition [which] is ultimately what we’re trying to do through this experience. It’s not about swapping one for the other or replacing one with the other. It’s actually additive; we’re adding rights and we’re adding capability and we’re adding the strength of two global companies around what we’re doing and that is of increased value. So I hope the fans who currently engage on either platform at the moment will see an improvement in what their perception is of a combined service and offering. That’s ultimately our goal.”

However, Paolo Pescatore, tech, media and telco analyst at PP Foresight, has a more cautious view on the plan to merge the content of both broadcasters under a single brand: “To the average punter on the high street, who is Discovery? No one’s really heard of Discovery and more to the matter, Discovery+. So what’s the branding of this entity going to be? And that’s crucial to the future of this venture.

“Simon Green [former head of BT Sport] and Jamie Hindhaugh have done a really great job of focusing on the BT Sport product and taking people to the heart of sports, from big screens to the living room and out and about on mobile devices,” continues Pescatore. “They will have to be very careful on how they manage this new entity; BT Sport is very much in people homes and hearts, but Discovery isn’t. This future brand is a huge question mark – not for BT Sport, but for Discovery. Whereas BT Sport is very clear as a sports-focused service, when you look at Discovery, it’s been hugely fragmented – with Discovery, Discovery+, Eurosport, and now Warner Bros. – the journey it’s been on has been a challenge. That’s something they really need to think about.”

Pescatore adds that offering both broadcasters’ products as standalone subscription options for viewers or as a bundle would be the better way to go, much like Disney and its offerings.

He goes on: “The questions are around the new entity’s branding, integration, bundling, and distribution. Its ability to secure and renew rights is another factor; what will be the financial clout of the new entity in buying rights, versus the likes of DAZN and Disney?”

Georgiou says that time will be taken on the rebranding of BT Sport and Eurosport in the UK and Ireland: “We’ve got no fixed timeline around the brand [development]. What we do have is a period of time where we know we’ve got existing relationships with partners around the businesses […] and they remain in place. It gives us time to think about what that brand is and what that brand represents to the British and Irish consumer. That is something that’s going to be important to us to develop because it’s going to be a new start; in many ways, this proposition has to be the best of both of what BT Sport and Eurosport UK has, but it also has to be new. We’ve got time to think about that.”

Prior to the Tokyo 2020 Olympics, Discovery’s host presenter Reshmin Chowdhury and Andrew Georgiou, president of sports at Discovery, speak from a studio in London to Scott Young, Discovery’s senior vice president of content and production, seen here talking to the pair live from the Olympic IBC in Tokyo. On the virtual TV behind the group, Young shows what the studio he is speaking from looks like

Strategic exit and new opportunities

BT will receive £93 million from Warner Bros. Discovery and up to approximately £540 million by way of an earn-out from the JV, subject to certain conditions being met. BT will retain a 50% interest in the JV, and Warner Bros. Discovery will be granted a Call Option over BT’s interest in the JV, exercisable at specified points in the first four years of the JV.

Notes Pescatore: “You can’t get away from the fact that this is BT making the strategic decision to exit the UK sports industry. This is BT exiting the sports business and Discovery stepping up its focus because of the fact it has an inferior sport position in the UK. I firmly believe this is very much a marriage of convenience.”

“The sports content will look like what people want it to be. The critical thing here is that constant opportunity to look at how [the viewers] watch [content], and audience insight telling us what they want to watch”

Yet Hindhaugh says: “With all of these things, I think you need to keep building, you need to keep challenging and you need to look at new opportunities. I see this as a marriage made in heaven. There’s some fantastic expertise – fantastic capabilities – across this massive organisation that we’re going to become a part of. The most important thing for me is the people that work for me deserve the best opportunity available, and I can think of no better opportunity than becoming part of this new enterprise, this JV that we’re doing. So for me, it’s really positive.”

Young comments: “I think the same goes for everybody at Eurosport and particularly in the UK business, they’re very excited about the opportunity to grow. Just recently in the launch of Warner Brothers Discovery we’ve entered a new phase for our own business. It’s been fantastic to collaborate with Jamie on how we can build this together and put two businesses that really enjoy content and storytelling, and that’s what we’re about everyday. When you look at the premium rights that we thoroughly enjoy across Eurosport and the amazing rights that we’ve got at BT Sport and you put that together under one roof, that is only equal to a really exciting opportunity going forward.”

Continued innovation and fan focus

On how the JV will continue the innovation that BT Sport is known for in the UK, Young comments: “[Innovation is] absolutely core of what we’re going to do together. This is something that Jamie has championed since his time of building BT and managing BT ever since. The last thing we want to do is stop any of that innovation through sports broadcasting and it’s not just through technology, but it’s by way of the rights that we acquire and how we deliver those rights to people on the right platforms, and how we put this together under one sport ecosystem. So I think the innovation is not just around technology, but that will definitely continue, but it’s about how we build a sports platform that is absolutely a premium [destination for] our audience.”

Young comments on what the sports content within the JV could look like going forwards: “In the short term, the content looks as it is; these two businesses sitting side by side. Now in this JV, how we start to bring all this together [is the question]. As part of our innovation of sports broadcasting, that’s not just technology; that’s not just what BT has been very focused on. It’s not just around the Cube, which we’re now very renowned for. It’s around how we actually want to deliver this content, how we bring the talent together, where we produce this from, how we use remote facilities, and how that helps us deliver content smarter to the audience. So there’s a lot to work through, but there’s a lot of opportunity. I think the great thing with all of the team here is we see this as a massive positive opportunity for a new era in sports broadcasting.”

Hindhaugh adds: “The sports content will look like what people want it to be. The critical thing here is that constant opportunity to look at how [the viewers] watch [content], and audience insight telling us what they want to watch, and bringing the two teams [here] together and being able to review and look at that. I always like a period in time when you can stop, look, review and go forward. This creates that fantastic opportunity to look at that so the content will look like what people expect and tell us they want to watch.”

Concludes Young: “There is an existing group of consumers who watch content on cable platforms, and there is an increasing group of consumers who watch content on digital platforms, and the strength of this partnership is to feed both audiences across all the platforms at our disposal, as much as we possibly can, and on what will the content look like, it will be tailored to the platform to some degree as well because every platform has a different nuance around what does that content need to look like for that platform in order to be effective. I think that’s our approach to market. We are happy and we’re open for business.”

BT Group and Warner Bros. Discovery will enter into distribution agreements with the JV under which they will distribute the combined sports content to new and existing customers on their respective platforms and apps.

Warner Bros. Discovery and BT will each directly contribute, sub-license or deliver the benefit of their respective sports rights and distribution agreements for the UK and Ireland to the JV.

The transaction is subject to customary closing conditions, including approvals by the relevant regulatory bodies and is expected to complete by the end of 2022.