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Shares in loss-making German pay-TV operator Sky Deutschland AG (SKYD.XE) soared over 20% early Tuesday amid hopes it will hang on to key Bundesliga soccer broadcasting rights for the next four seasons despite competition from telecommunications giant Deutsche Telekom AG (DTE.XE) for cable and satellite licences.
At 0854 GMT, Sky Deutschland's shares were trading 24% higher at EUR2.49 following a report in the daily tabloid Bild Zeitung that it will keep the live pay-TV broadcasting rights from 2013 to 2017, which didn't name sources. At the same time Germany's MDAX traded up 0.8%.
German soccer league association Deutsche Fussball Liga GmbH wasn't immediately available to comment on the report. It will announce the results of the auction at 1100 GMT. Sky Deutschland declined to comment.
Analysts say keeping the exclusive national TV soccer rights are crucial for Sky Deutschland to lure customers to its pay-TV services. The pay-TV operator "wouldn't be much" without the Bundesliga, one trader said, adding Tuesday's share reaction therefore isn't exaggerated.
Commerzbank analyst Sonia Rabussier said last week in a research note that retaining the rights would mean Sky Deutschland keeps its buy rating, and losing them would mean a downgrade to sell. UBS said earlier this month that Sky shares would only be worth EUR0.44 if it lost the rights, but winning them would equate to around EUR3 per share.
News Corp. (NWS), which owns Dow Jones, publisher of this newswire, has a 49.9% stake in Sky Deutschland, formerly known as Premiere AG.
DFL began auctioning Bundesliga rights for the 2013-2017 seasons earlier this year. Sky Deutschland currently pays between EUR225 million and EUR275 million a season for a package that includes rights to live broadcasts of Bundesliga matches via satellite and cable.
Bild's article said Deutsche Telekom's bid for the satellite and cable rights drove up the price of the rights, although it didn't specify an amount.
Analysts have been expecting a higher price in any case, with JP Morgan Cazenove forecasting Sky's price to increase by about 25% plus inflation.
-By Harriet Torry, Dow Jones Newswires; +49 69 29725 511; email@example.com
(Michael Fuchs and Philipp Grontzki contributed to this article.)