Shares in the British Sky Broadcasting Group (BSY) fell sharply on Thursday, putting a drag on the overall FTSE 100, after the television broadcaster announced it will be paying far more than expected to air English Premier League football matches. Shares fell by more than 7% earlier in the day, but then recovered slightly. Shares locked in a loss of 3.5%, closing at 671p per share. The company announced it had “successfully secured 116 live matches per year for the seasons running from 2013-14 until 2015-16,” paying £760 million per annum for the live rights. However, the broadcaster won’t have exclusive rights to all the matches because BT Group (BT.A) also won a deal to air 38 games per season. Shares in BT also fell by 3.5%, with investors believing both companies overpaid for the airing rights.
These two market laggards put a drag on the overall FTSE 100 index, which dipped down by 17 points, or 0.3%, to close at 5,467. Meanwhile, the FTSE 250 ended the day with a 36 point gain, closing at 10.575.
The main gainer that helped give the London-based mid-cap index a lift was the gold miner Petropavlovsk (POG), which announced it was raising its production target for 2012 and was also expecting lower costs. Investors bid shares up by 14.5%.
Investors were generally in a ‘risk-off’ mode on Thursday, said Joshua Raymond, chief market strategist at City Index. “Clearly investors are starting to focus much more towards the weekends Greek election, where a fair degree of uncertainty remains as to what the outcome could be. A victory for the leftist and anti-bailout Syriza party could end up seeing Greece forced to leave the euro if the newly installed government fails to adhere to the existing agreed bailout terms. This is why the stakes are so high for this weekend and with Spanish and Italian bond yields rising yet again today, with Spanish 10-year yields threatening a breach of the highly unstable 7% level, investors are refraining from taking on any risk at present.”
Looking ahead to the upcoming weekend and next week, there will be a flurry of market moving events and announcements, including the Greek elections.
“There are those occasions when everything seems to be taking place all at once, and next week fits that description rather well," said economist Philip Shaw with Investec Securities. "Number one on the list will be the results from the Greek elections ... [Meanwhile,] Spain will not allow Greece to monopolise the limelight. The Wyman and Berger independent ‘audit’ of the Spanish banking system should be published towards the back end of the week, which should influence the exact size of Spain’s bailout. [Keep in mind:] The EUR 100 billion cited was the maximum level. Moreover Spain plans a bond auction on Thursday, as well as a bill issue on Tuesday ... [Currently], 10-year Spanish sovereign yields had hit a new high of 6.9%.
“Just to continue the seemingly interminable stream of Euro area news, various important data releases are scheduled," said Shaw. "June’s ‘flash’ PMIs are due on Thursday with May’s indices consistent with the economy contracting again after a ‘flat’ Q1. Moreover the German IfO and ZEW surveys are also due. On Monday G20 leaders meet in Los Cabos, Mexico ... Wednesday’s FOMC meeting seems almost insignificant by comparison.”
