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Telecommunications firm BT Group PLC on Tuesday said its sports broadcasting joint venture with Warner Bros Discovery Inc will reduce revenue in financial year 2023 ending March 31 by £300 million to £350 million.
In May, BT agreed to a deal with Warner Bros Discovery which would see BT Sports and Eurosport combine.
Once complete, the production and operational assets of BT Sport would become a wholly owned subsidiary of Warner Bros. BT would get £93 million from Warner Bros and up to £540 million by way of an earn-out.
At the start of September, BT and Warner Bros announced completion on the transaction, after the UK's Competition & Markets Authority opted against referring the sports broadcasting joint venture to a phase two probe in July.
On Monday, BT said that with Warner Bros it has entered into distribution agreements with the JV under which they now distribute the combined sports content to new and existing customers on their respective platforms and apps.
BT's distribution agreement with the JV extends beyond 2030, and for the first four years, includes a minimum revenue guarantee of around £500 million per annum, after which payments to the JV will vary depending on customer base.
"Through the transaction, and with the support and strong partnership of Warner Bros, BT's risk exposure to sport has also been significantly reduced while ensuring that BT will benefit from the synergies created by the JV," the company added.
Looking ahead, BT expects the JV to reduce revenue in financial year 2023 by £300 million to £350 million, as a result of the seven months of the financial year revenue transferring to the JV.
However, its continues to expect underlying year-on-year group revenue growth in financial year 2023 on a pro forma basis.
The company also does not expect a material impact on adjusted Earnings before interest, tax, depreciation and amortisation outlook of at least £7.9 billion, as well as normalised free cash flow in the range of £1.3 billion and £1.5 billion.
In financial year 2022, BT reported revenue of £20.85 billion, adjusted Ebitda of £7.58 billion and normalised free cash flow of £1.39 billion.
Shares in BT were up 0.4% to 125.45 pence each in London on Tuesday morning.
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