BT outlines revenue impact of sports JV with Warner Bros Discovery

On Tuesday, UK telco BT provided the financial markets with guidance on the impact of the recently-announced joint venture between BT Sport and Warner Bros Discovery-owned Eurosport UK. Based on recent historical data, the company said that transference of revenues from BT Group to the JV will reduce reported BTG revenue for 2023 by £300-350m. However it expects sustainable revenue growth for this year and beyond. The share price responded by edged a couple of % higher.

BT’s note to the city explained that the merged operation “will have one of the most extensive portfolios of premium sports. This is an attractive agreement for BT, realising cost efficiencies and introducing further broadcast rights and expertise from Warner Bros.

Production; while operational assets of BT Sport have been transferred to Warner Bros. Discovery. As a consequence of the operational assets moving to Warner Bros. Discovery, there is a master service agreement whereby the JV is buying all production services from Warner Bros. Discovery.

Separately, BT Sport’s sports rights transferred to the JV. As a result, costs associated with sports rights, production and (operating expenses) are no longer reported within BT consolidated financials.”

BT’s distribution agreement with the joint venture extends beyond 2030, and for the first four years, includes a minimum revenue guarantee of £500m per annum, after which payments by BT to the JV will vary depending on customer base. BT will receive £93m from Warner Bros. Discovery and up to approximately £540m by way of an earn-out from the JV, subject to certain conditions being met.