Chief executive reveals how pay-TV minnow snatched the rights to some of the biggest football matches from BSkyB
For the man leading BT's challenge to BSkyB's 20-year stranglehold on live Premier League football, Marc Watson seems remarkably relaxed.
The 42-year old former barrister heads BT Vision, the pay-TV minnow that has so far struggled to make an impact. Watson hopes to help change that by offering BT Vision subscribers 38 live Premier League matches a season from 2013, including almost half the games between top sides such as Manchester United and Chelsea, as part of a three-year deal worth £738m.
Watson was a member of the small group of BT executives who plotted the telecoms giant's dramatic entry into the top tier of live football last month. No rival, and certainly not one with such deep pockets as BT, has established such a foothold since Sky won its first Premier League rights deal in 1992.
If BT had got its way, it would have been a knockout blow. "We'd have taken more games at the right price," says Watson, the closest he comes to admitting that BT submitted an eye-watering £2bn-plus bid to take the lion's share of matches away from BSkyB. "For the first time in history the Premier League sold the first-pick matches, the crown jewels, to someone other than Sky. We had a plan and we stuck to the plan. As a company we were pretty calm. We were never panicking and were confident in what we were going to do.We understood the risks and benefits and approached it with calm confidence – that is not to say arrogance."
This confidence was fuelled in part by the fact that the BT bid team was being advised by Tony Ball, a non-executive director. Ball, a former BSkyB chief executive with knowledge of previous Premier League rights bidding tussles, provided strategic insight into the commitment necessary to challenge the satellite broadcaster's hegemony.
"There were no false moustaches," says Watson, "but we had one advantage in being able to approach the auction undercover. Had our position been public … I'm not sure we would have got the outcome we did."
BT's secrecy worked well enough, with the company's bid only becoming public the day the Premier League revealed the winners of the rights auction. However, industry sources claim BSkyB was not caught completely off-guard, with the satellite broadcaster aware that at least one other major bidder was in the market (speculation focused on deep-pocketed al-Jazeera).
Watson joined BT Vision in 2007, having previously been a sports rights specialist. He spent seven years as a shareholder and director in the TV strategy and sports rights consultancy Reel Enterprises, now part of the US company Wasserman Media. Reel is a longstanding adviser to the Premier League in its rights negotiations and Watson found himself on the other side of the table from former colleagues.
He had never worked on the Premier League business at Reel but he did deals for the Football League and Scottish Premier League, which he negotiated with the now-defunct Setanta, as well as selling the European TV rights to the 2010 Winter Olympics and London 2012 Olympic Games to the European Broadcasting Union.
Before that he spent three years as Richard Desmond's general counsel in the late 1990s, when he helped OK! to overtake its arch-rival Hello! by inking the then record $1m contract for snaps of Michael Jackson's first baby, followed by the first-ever £1m picture deal, for the rights to David Beckham's wedding.
BT Vision, which marries Freeview with on-demand content via broadband, has not been the success envisioned when Watson's predecessor unveiled it as a rival to Sky six years ago and predicted 3 million subscribers by 2010.
BT has invested an estimated £800m in Vision to date, managing to attract just over 700,000 pay-TV subscribers, compared with more than 10 million for Sky and Virgin Media's 3.8 million.
However, Watson denies that the Premier League deal is boom or bust for BT Vision. "I reject even the basis of that question," he says. "There was a time when that was quite fair [to ask if BT Vision should be shut], not now. The business launched with great ambition but it turned out to be a much tougher marketplace, especially for content, than we thought it would be. Content is king and getting deals is difficult, that is indisputable."
BT intends to launch a Premier League channel that it will offer to rivals, although some observers believe that the company should turn the tables on Rupert Murdoch and keep it off Sky. Then, because it already has Sky's sports channels, BT Vision would be able to market itself as being the only place to watch all live Premier League matches.
However, Watson says he is keeping an open mind. "That is an option [not offering the channel to Sky], but it is early days, we are considering all options," he says. "Having games like these gives you options. We have had a lot of calls in the last few weeks. My instinctive view is to look to make it widely available, but we will see."
BT will have to spend up to £100m on production, according to one City analyst, on top of what it paid for the rights to match Sky's slick coverage, and Watson says that he has a "full inbox" of CVs from would-be presenters.
BT's move to challenge Sky on live football comes several years after the satellite broadcaster began moving into the telecoms giant's own core businesses of telephony and broadband.
BSkyB has used its investment in content, starting with football and movies, but now extending to high-end drama, to eat into core BT markets such as broadband by bundling packages of products with its pay-TV service. Since launching its broadband offering in 2006, Sky has attracted 3.9 million customers, close to being the third-largest internet service provider in the UK, with BT the market leader on 6.3 million.
"Lots of customers are happy to take calls and broadband but many, many want triple play, TV services as well," says Watson. "It is very important we play in this space. [The Premier League deal] should be seen as a statement of intent to protect and grow our retail business in the UK."
Watson also believes that the timing is right to launch the first new BT Vision set-top box since 2007, and add new pay-TV channels on the service from providers including UKTV and National Geographic. He is also looking forward to the imminent, if belated, arrival of YouView, which will finally get some set-top boxes in shops later in July.
"[YouView] absolutely still has the potential to be a game-changer in the market," he says. "The long-term success is much more important than it launching for the London Olympics. We are relaxed about the timing of YouView."
Previous challengers to Sky's Premier League rights dominance, such as On Digital and Setanta, could not match its financial muscle – and didn't last the course. BT, with a £2.4bn pre-tax profit last year on revenues of £19.3bn (compared to Sky's £1bn and £6.5bn), is a different proposition altogether.
However, Watson still argues that the rival broadcaster has too much power in the TV sports market. He believes that competition regulators did not go far enough in 2010 when BSkyB was forced to offer Sky Sports 1 and 2 to rivals at better wholesale rates, allowing it to make more money when selling packages to customers.
"If you want balance you have to have the right regulatory framework and the playing field is not as level as it should be," he says. "The wholesale must-supply deal for Sky Sports 1 and Sky Sports 2 is important in our thinking too. It has not gone as well as perhaps we hoped it might. It lacks Sky Sports 3 and Sky Sports 4 and we are really not happy with the pricing, it needs to allow us a better retail price and make for better margins. It has gone OK but it has not changed the dynamic of the market."
Watson jokes that he has worked out that his Luton Town has an infinitesimally small chance of making it to the Premier League in time for matches to be aired on BT Vision before the end of the three-year deal in 2016.
But he is less forthcoming about whether he will be drawn into another bidding war in the next Premier League rights auction. "Can you ask me that in three years, I'll probably answer it then," he quips, adding: "We are right at the beginning of a four-year journey, we need to demonstrate we can make a good job of this." Read More
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