DAZN in Talks to Buy BT Sport
Sports streaming platform DAZN is close to securing a deal to acquire BT Sport for an estimated $800 million. If the purchase goes ahead, it will support DAZN in its mission to become a major force in British sports broadcasting. However, Discover INC is also reported to be in the running, and has suggested forming a joint venture with BT.
If the deal goes ahead, DAZN will acquire BT Sport’s exclusive Premier League and UEFA Champions League broadcasting rights.
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Discovery in Rival Bid
It has been reported that sports streaming innovator DAZN is close to finalizing a deal to buy BT Sport. The deal is thought to be worth $800 million, or £580 million, and will help to establish DAZN’s position in the UK. BT Sport is one of the UK’s leading premium sports TV networks, rivalled only by Sky Sports.
The acquisition could grant DAZN exclusive rights to air Premier League and UEFA Champions League matches. Those rights are highly sought after, and would offer the platform a large number of viewers. According to Enders Analysis, BT Sport caters to around 5 million viewing households.
The video streaming service has been in negotiations with BT Sport since last fall. Insiders anticipated that DAZN has put up an offer worth more than £1 billion to reach its target. Its pursuit has not gone unchallenged, as US TV conglomerate Discovery INC has been cited as a rival bidder.
Neither DAZN, BT Sport or Discovery has commented on the matter. The deal could be reached as soon as before the end of January, according to insider sources. However, they also warned that it is not yet sealed and could still fall apart. While Discovery is still in discussions, DAZN is considered to be the strongest contender.
Discovery owns Eurosport, a pan-European group of sports channels. Eurosport is best known as the rightsholder for the Olympic Games in much of Europe. Discovery acquired a 20% stake in the sports broadcaster in 2012. By 2015, Discovery had acquired further stakes to achieve sole ownership of the venture.
Discovery has reportedly suggested establishing a joint venture with BT, an offer that has apparently been given some serious consideration. Negotiations have had to contend with the major obstacle of securing agreements with rights holders and broadcasters. Sky and Virgin Media distribute BT Sport’s programming in the UK and Ireland.
Rise of DAZN
DAZN and Discovery’s keen interest in BT Sport is not unprecedented. Live sports events are hugely popular, so broadcasters are willing to pay top prices to air games. In the US, rights deals signed by the NFL with ESPN, Fox, NBC, CBS and Amazon are together worth $100 billion over the next eleven years.
Over-the-top sports streaming platform DAZN was first launched in 2016. That year it debuted in Austria, Germany, Switzerland and Japan, before adding Canada to its roster the following year. The forward-thinking service rose in popularity quickly, and has since launched in the US, Italy, Spain and Brazil.
The venture was bankrolled by billionaire investor Len Blavatnik, who sought to capitalize on the popularity of live sports by offering fans a streaming service offering access to live events around the world. DAZN now caters to an audience of 11 million subscribers.
From an early outset, DAZN has been hailed as one to watch in the world of TV broadcasting. After just two years in business, it was thought to be worth in the region of £3 billion. The Evening Standard has described DAZN as one of the UK’s few “tech unicorns”.
It made its UK debut in December 2020, swiftly partnering with Matchroom Boxing. The deal was worth more than £100 million and saw DAZN oust Sky Sports after a decade as the promotion company’s exclusive broadcaster. That deal helped to boost DAZN’s brand recognition in the UK.
Former CEO of leading betting and gaming operator Entain, Shay Segev, spotted DAZN’s potential soon after its UK launch. In a turn of events that seemingly came out of the blue, Segev jumped ship from Entain in the middle of takeover discussions with MGM. Entain rejected MGM’s $11 billion offer, and Segev moved to DAZN to join James Rushton as co-CEO.
Exclusive Media Rights
BT Group launched BT Sport in 2013 as a means to expand its broadband services and to rival Sky. It opened as the exclusive broadcaster of UEFA Champions League matchdays, after securing a media rights deal worth £1 billion. It went on to renew that arrangement in 2019 for £1.2 billion.
Whilst the venture proved successful for BT Group in terms of securing new broadband customers, in 2020 it recorded losses of more than £2 billion. BT Group appointed investment bank Lazard to review potential options to sell, which would provide a much-needed cash injection as it rolls out its costly fiber and 5G networks.
If the deal moves forward, it will mark DAZN’s largest mergers and acquisitions investment so far. The addition of BT Sport’s assets would significantly support the company’s vision to become the “Spotify of global sports streaming”. A buyout would also provide DAZN with a platform for a future IPO on the London Stock Exchange.
Despite DAZN’s strong performance and rapid global expansion, the business has not gone unscathed by the pandemic. Blavatnik’s investment fund, Access Industries, has had to invest an additional $1 billion into the platform to keep it afloat. Disruption to sporting schedules in 2020 meant that broadcasters struggled to offer viewers fresh content to watch.
Betting firms also had a hard time with fewer events to offer wagers on, and some even turned to unusual sports like marble racing. Sporting schedules have since recovered, and operators found that their revenues were bolstered by a rise in online gambling during lockdowns.
DAZN has also had to contend with the high price of media rights. In 2019, it reported a loss of $2.15 billion after tax. It attributed that loss to investment in its platform and opening new markets in Spain and Brazil. Of that loss, around $1.7 billion was spent on acquiring sports media rights.
