On the day Jose Mourinho was ousted as manager of Chelsea football club, the only televised interview with him ran on BT Sport, BT’s pay-TV channel. The interview was pre-recorded, and had been filmed before Mourinho knew about his sacking, but its exclusivity was a feather in BT’s cap and delighted its chief executive, Gavin Patterson. “That was a significant moment,” he says.
Liverpool-supporting Patterson has taken a colossal risk in the past couple of years by challenging Sky, previously the nation’s dominant sports broadcaster, by doing big-money deals for live football rights. Other contenders, such as Setanta and OnDigital, fell by the wayside.
Patterson feels the group is beginning to reap the rewards of its massive investment. “Not so long ago, that interview would have run on Sky, with little chance of it appearing anywhere else,” he says.
But the same would have been said about most Champions League matches until, two years ago, BT Sport poached these rights for a sky-high £897m from its bitter rival. It has been broadcasting the matches this season for the first time, in an effort to gain broadband customers.
Patterson says: “There remain significant competition issues in pay-TV, but there should be plenty of room in the market for two players, if not more. Sky offers a great service, at a very high price, while we offer customers access to Premier League matches for free and Uefa matches for a modest fiver a month.”
So far the plan appears to be working. BT says it now has 7.8 million broadband users, up from 6.9 million a couple of years ago, as customers are lured to its broadband offering by incentive deals for BT Sport. Revenue in BT’s consumer division increased by 7% to £4.3bn in the year to March 2015, contributing to a jump in overall profits to £3.17bn. Despite the massive spend on sports rights the group’s share price has performed reasonably well, especially over five years: it now stands at more than twice its 2011 level.
Not that the year has all been about BT Sport. BT is also pushing other forms in a deal with US TV drama channel AMC (now broadcasting hit horror series Fear the Walking Dead), though it will be some time before BT’s television service can rival the choice on offer from Sky.
In what has been an all-action year, Patterson has also taken the group back into mobile telecoms with its £12.5bn takeover of EE. BT was one of the pioneers of mobile telephony, launching a network in 1986. But later it spun off O2 – then called Cellnet – and put mobile on the back burner. But the growth in smartphones persuaded BT back into the business. The acquisition of EE more than trebles BT’s total retail customers, adding its 10 million to EE’s 24.5 million direct mobile subscribers.
“Our mobile plans have added to the air of excitement in our industry and I’m hopeful that the Competition and Markets Authority will approve our acquisition of EE in January,” says Patterson.
Alongside all this consumer activity, Patterson is rolling out the group’s fibre-optic broadband network. “We’ve invested £20bn in UK networks over the past decade and that has helped make the UK the leading digital nation in the G20 for the past five years,” he says. “Nine out of 10 homes can now access fibre broadband and we’re not stopping there: plans are in place to get that to 95% if not higher by the end of 2017.”
In the year ahead, Patterson’s biggest battle will be to stop its Openreach division – which owns the pipes and cables that connect people to the internet – being forcibly split from the company.
Most of BT’s rivals, including Sky, TalkTalk and Vodafone, insist the fact that BT owns the fixed network is detrimental to the UK broadband market. Earlier this year, Ofcom, the telecoms regulator, decided to conduct a full and thorough investigation of the market, with a view to splitting BT and Openreach into two companies. Ofcom’s decision is due shortly, and BT, which argues that the current model has helped the UK beat its immediate European competitors, reckons it has a convincing case.
Patterson may well be looking forward to watching games like Arsenal v Barcelona on BT Sport, but his biggest challenge this year probably won’t be with Sky on the sports field, but with all his rivals in the regulator’s office.
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