Discovery, the US media powerhouse, and UK telecoms giant BT Group have today announced they are in exclusive talks to create a sport joint venture in the UK and Ireland and hope to conclude a deal “in the coming weeks”.

The proposed deal would see Discovery combine its Eurosport business in the UK and Ireland with pay-television operator BT Sport.

The companies are aiming for the 50/50 joint venture to be operational in 2022 pending a definite agreement and regulatory approval.

It is understood that discussions are at an advanced stage, with an agreement expected to be finalized imminently.

This comes as a huge blow to DAZN, the global sports streaming service, which had been in negotiations with BT for several months over a deal.

An agreement between DAZN and BT was reported to have been close in recent months but with talks dragging on Discovery has now stolen a march.

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By GlobalData

With the US media heavyweight entering into exclusive discussions, the DAZN deal is effectively dead in the water.

JB Perrette, president and chief executive of Discovery Streaming and International, said: “We are excited about this opportunity with BT Group to offer consumers a stronger and simplified combined sport offering in the UK and Ireland, and, more broadly, to advance our strategy of bringing sports and entertainment to more consumers on the platform of their choice.

“We are aligned with BT Group on a shared vision to maximize the value and appeal of our respective UK sport assets, and we look forward to concluding a deal in the coming weeks.”   

The UK venture would bring together BT Sport and Eurosport UK, an arm of the Discovery-owned pan-continental sports broadcaster.

Between them, the respective networks have an extensive portfolio of premium sport rights, including the Olympic Games, English soccer’s Premier League, Europe’s elite UEFA Champions League, secondary UEFA Europa League, cycling’s Grand Tours, tennis’ major grand slams, and Premiership Rugby. 

Discovery entered the global sports media business with its acquisition of Eurosport in 2014.

Its potential tie-up with BT Sport would provide significant competition to Sky, which has been the dominant player in the UK broadcasting market for decades.

Conrad Wiacek, head of sport analysis at GlobalData, commented: “Discovery entering into a joint venture with BT Sport ahead of an eventual purchase will not only change the shape of sports broadcasting but is a legitimate threat to Sky’s dominant market share position in the UK and European sports broadcasting.

“Discovery, which already owns the global media rights to the Olympics, is now likely to take control of one UK Premier League rights package as well as exclusive rights to show the UEFA Champions League in the UK worth a combined $1 billion annually.

“With Comcast now owning Sky and Discovery taking on BT Sport, the UK may become the first battleground in the US giants’ plans to become the dominant European sports broadcaster. With Sky having an established presence in multiple European territories already, and BT Sport owning the Champions League rights in the UK until 2024, Discovery will be looking to maximize subscribers through its Discovery+ platform and Olympic coverage.

“However, the big loser here is DAZN, which has been trying to establish a UK presence ahead of a possible IPO. Without BT’s subscriber numbers, the ‘Netflix of Sport’ now faces an uncertain future given the platform has been largely funded by billionaire Leo Blavatnik up to this point. Without a presence in one of the world’s largest sports rights markets, the viability of the entire platform may now be in question.”

Discovery’s sports business – under the Discovery Sports banner – now operates in over 200 markets outside the US.

As well as Eurosport, Discovery Sports’ consumer brands include Global Cycling Network (GCN), Global Mountain Bike Network (GMBN), Golf Digest, and GOLFTV.

The company also distributes content on its Discovery+ streaming service and free-to-air TV networks in Europe.

Meanwhile, BT is seeking to exit from its sports broadcasting activities, which it began with the purchase of rights to the Premier League in 2012 to drive subscriptions to its broadband services.

The telecoms firm is looking to refocus on its internet and broadband arms and is being assisted by Lazard, an investment bank, with the sale.

BT first revealed that it was in talks with several interested parties over a proposed sale of a stake in its sports broadcasting arm last April.