American pay-Tv provider Discovery (DISCA) is in talks to form a joint venture with U.K. telecom giant BT Group (BTGOF) focused on sports programming. Discovery shares jumped about 4.5% on Thursday to close at $28.93.
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BT Group runs its sports business under the BT Sports brand and holds major sports broadcasting rights in Europe, including certain Premier League and Champions League matches. On the other hand, Discovery has Eurosport, a leading destination for a variety of sports content in Europe. Eurosport also holds major sports rights, including the Olympic Games.
Joint Venture
The joint sports business would draw content from BT Sports and Eurosport, and focus on serving audiences in the U.K. and Ireland. BT and Discovery hope to complete the talks in early Q1 2022 and aim to have the business up and running later in the year. However, they will need to obtain regulatory approvals before they can launch the business. BT and Discovery would own equal stakes of 50% each in the joint venture.
BT Consumer CEO Marc Allera commented: “With a shared ambition for growth, as well as the combination of our world class sports assets along with Discovery’s premium sports and entertainment content, our customers will benefit from even more content in more places.”
Discovery Streaming and International CEO JB Perrette commented: “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.”
Analysts’ Take
In January, Bank of America Securities analyst Jessica Reif Cohen maintained a Buy rating on Discovery stock with a price target of $45, which implies 55.55% upside potential.
Consensus among analysts is a Strong Buy based on 5 Buys and 1 Holds. The average Discovery price target of $40.33 implies 39.41% upside potential to current levels.
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