Warner Bros. Discovery and British telecom giant BT Group have confirmed plans to form a 50-50 joint venture, creating a new premium sport offering for the UK and Ireland. This will see the transfer of the operating businesses of BT Sport to Warner Bros Discovery, effectively merging the content offering of both BT Sport and Eurosport UK.
Discussions of the deal were originally reported in February and talks have been ongoing for some time.
The JV’s portfolio of premium sports rights will include UEFA’s Champions League and Europa League, Premier League matches, Premiership Rugby, UFC, the Olympic Games, tennis Grand Slams 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.
BT will receive £93M ($113.6M) from Warner Bros Discovery and up to approximately £540M ($659.3M) by way of an earn-out from the JV, subject to certain conditions being met. BT will retain a 50% interest in the JV, and Warner Bros Discovery will be granted a call option over BT’s interest in the venture, exercisable at specified points in the first four years. If the call option is not exercised, BT will have the ability to exit its stake in the JV either through a sale or IPO.
Warner Bros Discovery and BT will each directly contribute, sub-license or deliver the benefit of their respective sports rights and distribution agreements for the UK and Ireland to the JV, the companies said. At completion of the transaction, the production and operational assets of BT Sport will transfer to, and become a wholly owned subsidiary of, Warner Bros Discovery.
The deal is subject to customary closing conditions, including approvals by the relevant regulatory bodies and is expected to complete by the end of 2022.
As part of the transaction, BT and Warner Bros Discovery will each enter into distribution agreements with the JV to become the official UK distributor of the JV’s sports channels across both sets of platforms. BT’s agreement with will extend beyond 2030, and for the first four years, includes a minimum annual revenue guarantee of approximately £500M ($610.6M), after which the agreement will change to a fully variable arrangement.
The JV will also enter into a new agreement with Sky, extending beyond 2030, to provide for its distribution of the JV’s combined sports content. As part of existing subscriptions, customers who access BT Sport through BT directly, and the majority of BT TV customers, are set to receive discovery+, the non-fiction entertainment streaming service that’s home to Eurosport’s live and on-demand streaming offer in the UK and Ireland.
Both BT Sport and Eurosport UK will initially retain their separate brands and product propositions before being brought together under a single brand in the future.
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.”
Andrew Georgiou, President and Managing Director, Warner Bros Discovery Sports Europe, added: “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 board of directors of the JV will be equally represented between appointees of the parties. The Chairperson of the Board will be a board director nominated by each shareholder on a rotating basis, the first of which will be Allera.
