BT share price ticks up on announcement of £663 million sports joint venture with Warner Bros

Published On: May 13, 2022Categories: Stocks & Shares2.2 min read

The BT share price is up over 1.5% today after it was announced the London-listed telecom and broadcaster has reached an agreement with Warner Bros Discovery on a joint venture that will combine their respective sports channels. BT Sport and Eurosport UK will be combined as a joint venture that combines the rights to popular sporting events and competitions including the Uefa Champions League and English Premier League football, Premiership rugby, the Olympic Games, tennis Grand Slams and the Tour de France.

Ownership of the joint venture will be split 50-50 but will also offer BT a route to a full exit should it wish to in future. The deal was areed in principal during exclusive talks held in February. The finishing touches have now been put to the agreement which BT’s chief executive Philip Jansen said has created “a new global content powerhouse”.

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BT will transfer BT Sport to Warner Bros Discovery who will create a new company that the British company will hold 50% ownership of. The U.S. media company also has a call option it can exercise at any point over the first four years of the joint venture, which will be chaired by BT’s CEO of consumer brands, Marc Allera.

The agreement will see BT bank an initial £93 million in payment from Warner Bros and it can then earn up to another £540 million through future “earn outs”. The deal’s completion was announced today alongside BT’s full year results.

It has been a positive twelve months for BT, whose valuation has gained over 6%, and almost 4% this year, despite a broader stock market sell-off. The company’s adjusted earnings were up 2% to £7.6 billion over the year to the end of March despite a 2% drop in revenues to £20.9 billion thanks to a successful strategy of cost cutting. Statutory per-tax profits were up 9% to £2 billion, which will result in a final dividend of 5.39p per share, taking the full-year dividend to 7.7p, in line with analysts’ expectations.

BT also said its current target of cost savings adding up to £2 billion a year by the end of its 2024 financial year has been extended to £2.5 billion by 2025. Cost savings are targeting an optimisation of its estate, which stood at over 300 premises. That will be reduced to about 30 and its HQ will move across London. However, there have also been job cuts and pay rises running below inflation which has prompted industrial disputes.

The telecom told shareholders today that it has been investing in the expansion of its infrastructure business Openreach’s full-fibre broadband network at an “unprecedented pace”. It aims to service 25 million premises across the UK by 2026. 7.2 million premises already benefit from full-fibre connections and 1.8 million customers have taken up the option of the higher internet speeds the company can now offer.

About the Author: Jonathan Adams

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