Pubs profits set to rise if satellite football case upheld

Pubs and pub companies could see their profits rise by more than three per cent if BSkyB loses its grip on televised football in the on-trade.

Following last week's legal opinion by EU advocate general Juliane Kokott that pubs should be able to show live football matches using foreign satellite equipment, Paul Hickman of City stockbroking firm Peel Hunt has estimated the scale of the benefits to pubs should the decision be upheld by the UK's High Court.

Noting that a recent Mintel survey found that the sports offering ranked 12th among reasons for a consumer visiting a pub, Hickman said he agreed with estimates that suggested Sky could lose £70m if the decision goes against it.

"Logically, that benefit would flow into the pub business," he said.

"Most of it would benefit tenanted pubs and freehouses, as managed pubs are increasingly moving away from wet-led models consistent with screen sports."

Hickman said the economic benefit would be indirect. "Existing tenants showing live football would see their costs reduced and others who previously didn't show sport could be inclined to take advantage of the cheaper environment.

"Plus the gains would eventually result in an increase in the pubco's share of income, roughly 50 per cent," he added.

In what Hickman called a "best case scenario" he estimated that Enterprise Inns would see a three per cent uplift to pre-tax profits, while Punch Taverns' pre-tax numbers could rise by 3.5 per cent.

Marston's could see a 1.4 per cent uplift, with Greene King's pre-tax profits rising by nearly one per cent.

"It is also likely that any gains made by tenants would be rentalised," Hickman added, "but this case could mean the difference between borderline pubs staying in business or going bust." He believed the case will take a further two years to be resolved.