There are lots of ways that businesses can try and grow their customer base and gain more sales than the opposition.
In the 1880’s Ralph Waldo Emerson coined the phrase
“build a better mouse trap,3 and the world will beat a path to your door”
Pretty much since then it has been accepted that having a better product than your rivals gives you a competitive advantage.
BT’s recent acquisition of the rights to show Champion’s League matches is a typical example of that strategy, though the products of TV providers are a little harder to measure than rodent death rates. Previously BT had muscled in on Sky’s dominance of domestic football by purchasing high profile “first pick” English Premier League football matches. This together with women’s tennis and cup rugby union has been used to attempt to grow their number of subscribers by having a better product. The difficulty with the package to date though is that whilst it is a useful add on most sports fans are likely to stick with Sky because of the range and breadth of their coverage or watch the free to air things that are still on ITV.
What BT needed was something that the others haven’t got. The EU protect things like the Olympics and the football World Cup, and lots of other desirable things like The Ashes and England cricket have long since been sold to Sky so BT needed to be inventive.
What they did was to bid for and win exclusive live coverage of Champions League football in all its forms. Whilst
any non-football fans may be whooping with joy that Coronation Street and Emmerdale can now be returned to their rightful place on Wednesday nights on ITV, the problem is that advertisers like the Champions League, as it is a good way to target the demographic who would probably not watch the soaps.
The logical outcome here was supposed to be that BT would be the winners with Sky and ITV losing out. However that is not what has happened.
Predictably BSkyB’s shares dropped like a stone from approx £9.40 to just over £8 and ITV’s from £1.94 to £1.82. More surprisingly though rather than increase BT’s shares also suffered a sudden drop. This is partly because the £900 million paid is an extortionate amount to gamble on something that is not domestic football. While the punters may occasionally be interested in Barcelona or Real Madrid the household names of FC Copenhagen v Galatasary or FK Austria Vienna v Zenit St Petersberg are less of a draw.
In the end the plan of stealing a march on the rivals has resulted in everyone losing.
It seems that the only winners will either be the players and teams already awash with money to burn or fans of I’m an X Factor Talented Dog in need of Emergency DIY.
It seemed like a good idea at the time…- By Nick Walker (Premier Training Tutor)
Share values are covered in unites personal tax, business tax and financial statements of the AAT.