Sky pays up to tighten grip on German soccer

FRANKFURT Tue Apr 17, 2012 1:34pm BST

A microphone of Sky Sport TV station is seen before the German Bundesliga first division soccer match between Bayern Munich and Hoffenheim in Munich March 10, 2012. REUTERS/Michaela Rehle

A microphone of Sky Sport TV station is seen before the German Bundesliga first division soccer match between Bayern Munich and Hoffenheim in Munich March 10, 2012.

Credit: Reuters/Michaela Rehle

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FRANKFURT (Reuters) - Sky Deutschland, part owned by Rupert Murdoch's News Corp, has heavily outbid Deutsche Telekom to retain key rights to German league soccer, a move seen as crucial to the future of the loss-making pay-TV group.

Competition drove the price up sharply, with the German Football League (DFL) saying media rights for the four seasons starting 2013/14 would raise an average 628 million euros ($820 million) per year, up 52 percent on the current four-year deal.

Sky Deutschland retained rights to show Bundesliga matches via cable and satellite, as well as winning mobile and IPTV rights previously held by Deutsche Telekom.

DFL head Christian Seifert told a news conference Sky Deutschland succeeded with its bids for three of the rights packages it won because its offer was more than 20 percent higher than the closest bid.

There was a gasp in the room when Seifert announced the overall value of the deal, without giving a breakdown of who will pay what.

Sky Deutschland said it will pay 485.7 million euros per season, in each of which it will show 612 live matches.

Its shares were up 11 percent at 2.2210 euros by 1310 GMT, having earlier been up as much as 25 percent after a report it had retained the rights.

Sky Deutschland needs the cable and satellite rights to survive because soccer is a big draw for many of its 3 million subscribers. Sport has long been one of the main drivers of pay TV, and News Corp companies have always been prepared to pay a premium for rights.

To shore up cash for the rights, Sky Deutschland sold new shares for more than 150 million euros earlier this year and has plans to raise about another 150 million later this year.

Deutsche Telekom shares were up 1.4 percent to 8.66 euros.

CLUBS CASH IN

While the deal showed the appetite for live sporting action among pay-TV groups, the Bundesliga, which has a strong domestic audience, lacks the international appeal of English soccer which has lucrative overseas deals to augment domestic TV income.

The English Premier League gets an average 600 million pounds ($950 million) per season from BSkyB and ESPN for domestic TV rights under a three-year deal that expires in 2013 and is about to be renegotiated.

Bayern Munich, Germany's richest club, was ranked behind Real Madrid, European champions Barcelona and Manchester United in terms of revenue in 2010/11, according to Deloitte. Schalke 04 were the only other German club in the top 10.

Bayern face Real Madrid on Tuesday in the last four of the Champions League, Europe's top club competition.

($1 = 0.7656 euro)

(Additional Reporting by Peter Maushagen, Alexander Huebner and Harro ten Wolde in Frankfurt, and Keith Weir in London; Editing by Hans-Juergen Peters and Dan Lalor)

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