After courting BT since the middle of last year, Sir Leonard Blavatnik’s sports streaming empire had been expecting to seal a deal for the telecoms giant’s sports channel.
Winning control of BT Sport, which has rights to live coverage of the Premier League, Champions League and rugby union, would permit a bolder push into the British market for Dazn, the heavily loss-making app that has been furnished with billions of pounds of investment from Britain’s richest man.
BT Sport would also give Dazn a launch pad to pursue a grander ambition of floating on the London Stock Exchange later this year. In the end, however, the deal failed to hit the back of the net.
Despite months of negotiations, Dazn’s deal team was snubbed on Wednesday night when BT executives gave into the overtures of a rival suitor.
Discovery, the US media powerhouse behind Eurosport and the live Olympic Games coverage, burst onto the scene in December in an attempt to derail Dazn’s plans.
In a media call on Thursday morning, BT chief executive Philip Jansen said he had “two very good external options” but it was a joint venture with Discovery that “made sense for all stakeholders and customers”.
BT’s decision to turn to John Malone’s company poses searching questions about the future of Dazn, which faces a battle to wean itself off the handouts provided by Sir Leonard’s Access Industries.
But can the service dubbed by some as the “Netflix of sport” take a compelling story to the stock market without BT Sport spearheading the attack?
Sources claim Dazn could have sealed a takeover of BT Sport months ago, but had become bogged down in the commercial details as it relentlessly sought better terms.
Every time BT had ironed out a concern thrown up by Dazn, another issue would arise and bring progress to a halt, an insider says.
Among the hurdles were long-term guarantees Dazn wanted from BT to cover the costs of BT Sport if customers cancelled their subscriptions. BT is believed to have refused.
Dazn’s deal team is also understood to have miscalculated Discovery’s interest. It viewed it as a stalking horse when The Telegraph revealed the US broadcaster’s intent in December.
Yet Discovery was not playing any games as talks dragged late into Wednesday night at BT’s new offices in Aldgate on the edge of the City.
Marc Allera, the head of BT’s consumer division, and the company’s deal team wrangled over the finer details of the two offers as they raced towards deadline. The board eventually settled on Discovery, before the decision was revealed to the market hours later on Thursday morning.
For Kevin Mayer, the chairman of Dazn, the failure to reach an agreement was down to BT Sport proving “uneconomical” for the business. “We remain fully committed to growing our business and investing in the UK, as you will see in the near future,” he added.
However, Dazn’s next steps remain unclear. Shay Sergev, its new chief executive, must find a way to stem losses that swelled to $1.9bn for the year to December 2019, compared to a $731m loss the year before.
Sir Leonard’s Access Industries had provided loans worth $925m during the period for TV rights, marketing and technology development. Dazn’s accounts for the year to the end of December 2020 remain overdue at Companies House.
