BT Sport and Eurosport to merge
BT and Warner Bros. Discovery have agreed the terms of their joint venture.
Exclusive discussions between the pair were announced in February, with the plan to create a 50/50 joint venture for the UK and Ireland. Warner Bros. Discovery beat DAZN to the deal, with the streaming giant having aimed to buy BT Sport outright.
The joint venture will begin with rights to the UEFA Champions League, UEFA Europa League, the Premier League, Premiership Rugby, UFC, the Olympic Games, tennis Grand Slams featuring the Australian Open and Roland-Garros, cycling Grand Tours including the Tour de France and Giro d’Italia and the winter sports World Cup season.
Initially, BT Sport and Eurosport will stay as separate brands and propositions, but they will merge at some point in the future.
On the consumer side, customers who access BT Sport through BT directly, and the majority of BT TV customers will now also receive Discovery+ as part of their subscriptions. Discovery+ is home to Eurosport as well as a host of non-fiction entertainment.
As well as the sports content being distributed through Discovery+, under the joint venture, BT will enter into a distribution agreement to distribute the combined sports content to new and existing customers on their platforms and apps.
BT will receive £93 million from Warner Bros. Discovery, and up to approximately £540m by way of an earn-out from the JV, subject to certain conditions being met. Warner Bros. Discovery will have opportunities to complete a full buyout of BT Sport, with BT plc at first retaining a 50% interest in the JV. Warner Bros. Discovery will be granted a Call Option over BT plc’s interest in the JV, exercisable at specified points in the first four years of the JV.
If the call option is not exercised by Warner Bros. Discovery, BT plc will have the ability to exit its stake in the JV either through a sale or IPO.
The deal is expected to be closed by the end of 2022, and is subject to customary closing conditions.
• BT Sport and Eurosport UK to be brought together to form a premium sports joint venture for customers in the UK & Ireland which will be owned 50:50 by BT plc and Warner Bros. Discovery.
• Warner Bros. Discovery and BT plc will each directly contribute, sub-license or deliver the benefit of their respective sports rights and distribution agreements for the UK & Ireland to the JV.
• The Transaction will deliver operational efficiencies through the transfer of the operating businesses of BT Sport to Warner Bros. Discovery.
• BT plc will receive £93m from Warner Bros. Discovery and up to approximately £540m by way of an earn-out from the JV, subject to certain conditions being met.
• BT plc will retain a 50% interest in the JV, and Warner Bros. Discovery will be granted a Call Option over BT plc’s interest in the JV, exercisable at specified points in the first four years of the JV.
• The Transaction is subject to customary closing conditions, including approvals by the relevant regulatory bodies and is expected to complete by the end of 2022.
Marc Allera, CEO of BT’s consumer division, said: “As a global sports and entertainment broadcaster Warner Bros. Discovery is the perfect partner to work with us to take BT Sport to the next stage of its growth. We’re excited to be joining forces to bring the best of BT Sport together with Eurosport UK to create a fantastic new sports offer alongside all the entertainment that discovery+ has to offer BT customers.”
“I’m incredibly proud of the established, creative and innovative broadcaster that BT Sport has become. We have a brilliant team who are dedicated to broadcasting amazing sporting moments and we look forward to working with Eurosport UK to realise the opportunities that this next stage will bring both our team and our viewers.”
Andrew Georgiou, president and managing director of Warner Bros. Discovery Sports Europe, added: “We are excited to bring fans a new premium sport offering that brings together everything they love from BT Sport and Eurosport UK. Combining this with our growing portfolio of premium entertainment content promises to deliver consumers a richer and deeper content proposition, not only providing greater value from their subscriptions but bringing sport to a wider entertainment audience.”
The Transaction constitutes a class 2 transaction for the purposes of the UK Financial Conduct Authority Listing Rules and, as such, BT Group plc shareholder approval is not required.
Lazard is acting as exclusive financial adviser to BT Group and CMS Cameron McKenna is acting as legal adviser to BT Group. DLA Piper is acting as legal adviser to Warner Bros. Discovery.