Spending £738m on football might annoy customers waiting for a fast internet connection, but BT thinks it can afford it
And now over to the football results read by James Alexander Gordon: Premier League footballers 1: BT and BSkyB shareholders 0. The £3bn carve-up of the Premier League broadcast rights was a shock result that had footie fans cheering, but investors weeping into their cups of Bovril.
The arrival of a formidable challenger to Sky in the shape of BT is to be welcomed, because competition will keep TV and broadband prices keen. But the telecoms provider's expensive foray into sports broadcasting will stick in the craw of the millions of households still waiting for a decent broadband connection.
BT is writing a £738m cheque for 114 games – nearly £6.5m a match – which works out at roughly a third of the £2.5bn it is spending to upgrade its creaking copper network to fibre for an increasingly internet-addicted customer base.
That investment will mostly cover urban areas, the two thirds of UK homes that are easiest to reach and already have access to the most reliable broadband, as well an attractive alternative in the shape of Virgin Media's very fast cable network.
But what of the households being left out in the cold? The government has earmarked public money to ensure that, within five years, 90% of the UK will have superfast broadband, with the final 10% guaranteed a basic 2Mb connection – enough for one computer to watch the BBC iPlayer.
That pot of public money is just £530m, comfortably less than BT's football flutter, and the company has offered to match that when it wins contracts from local councils to carry out the work. Further sums may come from Europe. But there are already signs that this won't deliver the 2017 targets.
On Friday morning, as the City was digesting the dramatic shift in Britain's pay-TV landscape by lopping points off BT's and Sky's share prices, Cumbria county council took a brave decision.
Living in one of Britain's beauty spots has its disadvantages, and many Cumbrians are on the wrong side of the digital divide when it comes to broadband. The council has £40m, including £17m from the government pot, to get 90% of homes and businesses connected with speeds of 25Mb or more by 2015.
BT and rival Japanese group Fujitsu have both submitted bids for the work. After months of deliberation, instead of declaring a winner, the council has very publicly sent them back to the drawing board. BT says it cannot afford to spend more on fibre, because even in urban areas the new cables will take 12 years to turn a profit. Perhaps. But the football rights only last for three years, and experts at research firm Enders Analysis think it unlikely BT will make a return by 2016. Unless it can take more matches from Sky in the next auction, or dramatically increase the 700,000 subscribers to its BT Vision TV service, the sports channel will probably continue to make a loss.
It's a pattern that bankrupted previous Sky challengers like Setanta, but with £6bn a year in earnings, BT can afford to take the hit. And it argues that good TV content will help sell fibre. Bundle in 80Mb broadband with top-flight films and sport and you can reel them in.
Ultimately, what BT has chosen to do is invest its money where the competition is. It is laying fibre in Virgin Media areas, and investing in TV in order to keep its own broadband customers from jumping ship to Sky. In Cumbria, nobody is lining up to build a deluxe fibre network.
The government has no plans to divert significant new sums into broadband before the next general election, despite the economic benefits that good internet access can bring. The argument from the ministers in charge, Jeremy Hunt and Ed Vaizey, is that the private sector will fill the gap. But the Premier League's pay rise suggests that more money will flow into football than fibre.
Electrical fault
Welcome to the top job at Dixons, Seb James: your first task is to decide whether there's any point in selling electrical goods in Greece and Italy. Even French giant Carrefour said on Friday that it was getting out of Greece. Would it be brave or foolhardy for Dixons to stay?
Unfortunately for James, this question requires an urgent answer. For the past two years, it could be ignored because the group's biggest problems lay at home: the internet changed life forever for electrical retailers and Dixons was caught half asleep. James's predecessor, John Browett, performed a heroic back-to-basics rescue act, investing in customer service and seeing off US challenger Best Buy. These days, the UK operation is producing profits of about £80m: that's not like the good old pre-internet-shopping days, but it's a better performance than the sceptics feared.
But the "southern Europe" problem was largely ignored when the focus was on the UK and while the group's Scandinavian operation continued to shine, generating top-line profits of around £100m. It was a case of crossing fingers, running a tight ship and hoping gentler economic winds would arrive.
That stance doesn't look credible for much longer because the problem is becoming too big to ignore. Southern Europe (not just Greece and Italy, but also better-performing Turkey) will turn in a loss of about £30m when Dixons reports on Thursday, almost twice last year's outcome. And the Pixmania online business on the continent could lose as much as £20m. A combined £50m operating loss is a serious headache in the context of a company whose pre-tax profits, after heavy interest costs, are £65m-£70m.
What's the answer? One suspects James will attempt to buy time, promising to trim costs further in southern Europe and to minimise the cash drain; after all, a bite-the-bullet exit would generate significant closure costs. But he'd be taking a gamble. If radical surgery is inevitable, it may be better to get on with it. As matters stand, the questions over Greece and Italy are killing the share price, which has fallen from 18p to 13p since the end of April.
Hidden depths
Normally, only scoundrels plump for the Maxwellian option of banning the media from an annual general meeting. But as the "shareholder spring" closes, there are still FTSE 100 bosses attempting to emulate the great Mirror Group pension thief.
Journalists were barred from the AGM of security group G4S this month, a move so in keeping with the mood for transparency that mining company ENRC followed suit.
The two firms have little in common, except for wrestling with inconvenient problems that need hushing up. For G4S that includes the story of an asylum seeker dying in its care; meanwhile, ENRC can't shake corruption suspicions and worries over the influence of controlling shareholders. Mehmet Dalman, the new ENRC chairman, insists he runs the company in the way he sees fit, but also says the press blackout was imposed on him by his board.
There lies the irony. Restricting access to AGMs may prevent some information emerging. It also reveals plenty more. Read More
انسخ الكود التالى و ضعه فى موقعك او مدونتك.
