HomeInsightsBT and Sky finally reach an agreement for cross-supply

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After years of on/off negotiations, it was announced on Friday 15 December that BT and Sky have agreed a cross-supply deal for the marketing and distribution of each others channels and services.

It is expected that BT will market and sell Sky’s NOW TV streaming service on BT TV, whilst Sky will receive wholesale supply of the BT Sport channels, enabling Sky TV subscribers to receive the Sky Sports and BT Sport channels under one contract. Arguably, from a consumer presentation (if not price) perspective, the Sky offering is fairly similar – the main differences being that the BT Sport channels will be retailed by Sky as part of its subscription packages (rather than self-retailed by BT on the open satellite platform) and will therefore be included “off-platform” within the Sky Go environment. Interestingly, BT Sport will also be available as an app on NOW TV set-top-boxes. The length of the deal has not been confirmed but it will reportedly start in early 2019 – in good time for the start of the 2019/20 Premier League season (the first in the new rights cycle).

Little is known about the details of the arrangement but Sky has made clear in its press release that “As retail agent, BT will sell NOW TV on Sky’s behalf…“. This suggests that whilst BT may bundle NOW TV with its other products and services and control subscriber billing, Sky will continue to set the retail price and have the ultimate relationship with subscribers (in the sense that the terms and conditions of access will be dictated by Sky). Further, the commercial terms of the cross-supply will need to be very complex to deal with a scenario where one (or both) parties fail to maintain the status quo in terms of Premier League matches/slots won and, depending upon the length of the deal, such content protections could stretch to the competitors’ respective other marquee rights and properties.

A crude analysis would suggest that this collaboration is likely to suppress the bids delivered to the Premier League in the New Year from these broadcasters given that presumably part of the deal is to guarantee to each other that each Premier League match will be included on services licensed as part of the cross-supply.

There has been much speculation as to whether an OTT player might throw its hat into the ring in the present tender process, however, in the last week or so, many commentators and analysts have predicted that this is “one cycle too early” and that a meaningful bid for live rights from an internet-only distributor is unlikely this time around. All of that said, this move by two rivals seems to be underpinned by a desire to recoup their huge investments in sports rights and to keep challengers such as Amazon and Netflix from the door.