BT Group is set to transfer the operating businesses of BT Sport to Warner Bros Discovery as part of a joint venture under which BT Sport will combine with Eurosport in the UK.
It was reported in February that BT Group and Discovery were in exclusive discussions and today (12 May) it was announced that the two companies have agreed terms to form a 50/50 joint venture company.
Under the agreement, BT will receive £93m from Discovery and up to £540m by way of an earn-out from the JV, which is subject to certain conditions being met. Following the transfer, BT Sport will become a wholly owned subsidiary of Discovery.
As part of the transaction, Discovery will also have the opportunity to exercise a call option to buy BT’s shareholding in the JV at a price to be determined at the time, plus any remaining consideration and earn-out that BT will be entitled to.
However, Discovery does not have to proceed with this option and if it does not, BT will be able to exit its stake either through a sale or an initial public offering.
The call option will be exercisable at specific points during the first four years of the JV.
According to a statement, bringing together the sports content offering of BT Sport and Eurosport UK, means the JV will have “one of the most extensive portfolios of premium sports rights”, including the Uefa Champions League, Uefa Europa League, the Premier League, Premiership Rugby, UFC, the Olympic Games, tennis Grand Slams, cycling Grand Tours and the winter sports World Cup season.
Customers who access BT Sport through BT directly, and the majority of BT TV customers, will receive Discovery+ as part of existing subscriptions.
The JV will also enter into a new agreement with Sky extending beyond 2030 to distribute its combined sports content.
Initially, both the BT Sport and Eurosport UK brands will be kept, as well as their separate product propositions, however the plan is to bring them together under a single brand in the future.
BT Group and Discovery will both be able to distribute the combined sports content to new and existing customers on their respective platforms and apps.
BT Group launched BT Sport in 2013 hoping to attract broadband customers that it had been losing to rival Sky.
It acquired rights to show Premier League (which it shares with Sky Sports and Amazon Prime) and Champions League matches, and had succeeded in attracting a peak of 3.5 million subscribers in 2016. In 2021 this had fallen to 1.6 million.
The telecoms company had been in talks with potential suitors for its sports business for over a year, including the sports streaming service DAZN.
Discovery bought Eurosport in 2014, and its TV and online properties now have an audience of more than 50 million viewers per month.
Marc Allera, chief executive of BT’s Consumer division, said: “As a global sports and entertainment broadcaster, Warner Bros Discovery is the perfect partner to work with us to take BT Sport to the next stage of its growth."
Andrew Georgiou, president and managing director, Warner Bros Discovery Sports Europe said: “We are excited to bring fans a new premium sport offering that brings together everything they love from BT Sport and Eurosport UK."
The statement detailed that, as at 31 March 2022, the value of the gross assets of BT Sport business to be contributed to the JV and the operating businesses of BT Sport was £339m and it had an operating loss for the year of £222m.
Meanwhile, as at 31 March 2022, the value of the gross assets of Eurosport UK’s rights and distribution agreements contributed directly to the JV was £12m and it had an operating profit for the year of £16m.