London, June 15 (ANI): UK telecommunication companies British Sky Broadcasting Group (BskyB) and BT have been yellow-carded by investors after jointly committing to pay three billion pounds to screen Premier League football, over fears that the companies had overpaid for the live football rights.
The decision wiped a total of 974 million pounds off their market values on Thursday.
Satellite broadcaster BSkyB's shares fell as much as 8pc in early trading but rallied in the afternoon on a buoyant US market, closing down 3.5pc at 671p over fears it had overpaid for the football rights, which were compounded by the threat of increased competition from BT, and the fall took nearly 400 million pounds off the company's value.
According to The Telegraph, analysts have revealed that in a 2.3 billion deal signing for live Premier League matches, BSkyB has exposed its dependence on football rights and the potential damage it could suffer if they are diluted or taken away.
The broadcaster, which is 39pc-owned by Rupert Murdoch's News Corporation, will pay 769 million pounds a year to broadcast 116 live matches over the three years from 2013, and the deal meant that the company will be paying 40pc more than at the last auction, for just one extra match.
BSkyB will be able to choose 20 matches first, leaving BT with first pick on the next 18.
However, analysts cited that BT's 738 million pound deal drove is shares 3.5pc lower to 201.7p, poses a major threat to BskyB, as the telecom company is already BSkyB's biggest rival by far in the broadband market, with 6.3m internet customers, only 700,000 of whom take its television product, BT Vision, and by buying Premier League rights, it has signalled its ambition to take on BSkyB in the pay-TV market.
"This move by BT has logic as a way to leverage its broadband infrastructure but may come as a shock to many investors as the company attempts to boost growth, as cost-cutting becomes less of a driver of future earnings," Deutsche Bank analysts said. (ANI)