LONDON -- BT (LSE:BT-A) (NYSE:BT) made a surprise announcement today that it will make its new sport channels available at no extra cost to customers of BT broadband, seen as a direct threat to BSkyB's (LSE:SKY) expensive subscription services to its sports channels.
Upon the release of the news, BT chief executive Ian Livingstone commented: "U.K. Sports fans have had a rough deal for too long. Many have been priced out of the market but we will change this by giving away BT Sport for free with our broadband."
BT will broadcast 38 Premier League games a season for three years from August 2013, including 18 "first pick" games, whereby the company will have the option of the weekend's biggest games. They will also show FA Cup and Europa League matches after buying most of ESPN U.K.'s operation and sports rights, as well as broadcasting MotoGP races and UFC fights among other sporting events.
The company continues to show its intent to challenge BSkyB in the paid-for television arena, bolstered by big names joining its sports operations such as anchor Jake Humphrey, chief football reporter Ray Stubbs, as well as the likes of Rio Ferdinand, Michael Owen, David James, Steve McManaman, and Owen Hargreaves as football experts, not to mention household names like Clare Balding, Tim Lovejoy, and Craig Doyle fronting other sports shows.
And it looks like Sky is taking the threat seriously, as it has so far refused BT's requests to take advertising for its new sport channels. The issue has been formally submitted to Ofcom, with managing director of BT Retail's consumer division John Petter saying: "We are happy to take Sky's advertising but they seem afraid of taking ours."
So, are these moves into new services going to turn the company into a cash cow? That's what investors will be asking themselves but, with BT currently yielding around 3%, I believe there are better yields available in the FTSE 100.
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