Bloomberg News

Sky Deutschland Shares Jump on Budesliga TV Rights Report

April 17, 2012

The Sky Deutschland AG logo is displayed outside the company's headquarters in Unterfoehring near Munich. Photographer: Guenter Schiffmann/Bloomberg

The Sky Deutschland AG logo is displayed outside the company's headquarters in Unterfoehring near Munich. Photographer: Guenter Schiffmann/Bloomberg

Sky Deutschland AG (SKYD) beat rivals including Deutsche Telekom AG (DTE) in an auction of broadcasting rights for Germany’s Bundesliga soccer matches, expanding its license to show the country’s most-watched sports through 2017.

The broadcaster controlled by Rupert Murdoch’s News Corp. retained the rights to show live pay-TV matches via cable and satellite, and won additional licenses to beam them on the Web, via mobile devices and Internet-based TV, the DFL league association said today. The deal boosted the average annual income from the German rights by 52 percent to a record 628 million euros ($825 million) for the four years through 2017.

“We didn’t expect results like this, it clearly exceeded our expectations,” Christian Seifert, the league’s chief executive officer, told a press conference in Frankfurt. Sky’s offer beat second-best bids by at least 20 percent in three of the four categories it obtained, he said.

Sky Deutschland is relying on the rights to attract viewers to help the company reach an operating profit next year. Sky’s shares, which jumped as much as 27 percent today before the announcement, erased some of the gains after DFL disclosed the auction results and prices. They traded 10 percent higher at 2.20 euros as of 4:43 p.m. in Frankfurt.

Live Coverage

Sky Deutschland, with its headquarters near Munich, will pay 485.7 million euros per season, it said in a statement. The rights also allow for live coverage of all matches in Germany’s second-tier league.

Deutsche Telekom, which will be stripped of its rights to show the matches over the Internet, now expects Sky Deutschland to offer talks on how the Bonn-based phone company may continue to show Bundesliga matches, said Christian Illek, head of Deutsche Telekom’s German marketing.

“Of course we are disappointed, since we had a comprehensive plan that would have benefited all soccer fans across Germany,” Illek said on a conference call. Deutsche Telekom “went to the limit” with its offer, he said.

The shares rose 1.4 percent to 8.67 euros.

Publisher Axel Springer AG (SPR) also won some rights to show highlights of the matches on the Web and on wireless devices.

Sky Deutschland Chief Executive Officer Brian Sullivan is keeping open the option of cooperating with other parties on the broadcasting rights, according to spokesman Joerg Allgaeuer.

BSkyB Model

The broadcaster in February announced plans to raise 300 million euros by September to help fund its expansion. The expenses for the broadcasting rights will be financed from the company’s cash flow, Allgaeuer said. Sky Deutschland, betting on additional subscribers to help cover the costs of the rights, boosted its customer base to 3 million as the end of December.

British Sky Broadcasting Group Plc (BSY), the U.K. pay-TV company also partly owned by News Corp., has held exclusive rights to England’s top soccer games since 1992. The company has more than 10 million subscribers and is one the most profitable businesses of News Corp. (NWSA:US)

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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