BT and Discovery team up for new sports venture​

By Jake Rickman​

What do you need to know this week?

Britain’s BT Group plc and the US media company Discovery, Inc. have announced a potential partnership on a new sports streaming venture.

If negotiations are successful, the two companies will create a new sports package that would allow British viewers to stream English Premier League and Champions League games, in addition to other sports like tennis. BT customers would also get access to Discovery's licences for US sports, including American football and Major League Baseball.

The deal will commence as a joint venture. This is in contrast with earlier negotiations BT abandoned with DAZN, which would have sold BT Sport to the streaming company owned by billionaire businessman Len Blavatnik.

Why is this important for your interviews?

M&A deals and sizeable private equity buyouts often receive a lot of market attention. But these are not the only way that companies can find synergies, broaden their market, and improve their respective performances.

Joint ventures, commonly called JVs, provide another way for companies to structure high-value deals. They differ from M&A and PE deals crucially in that each party is still fundamentally distinct from the other. Under English law, JVs provide more flexibility than traditional share or asset purchases because the terms of the JV are essentially partnership agreements between large companies. For example, a JV agreement can permit one party to use the other party’s assets under certain terms as if it were theirs.

Some examples of previous high-profile JVs include Molson Coors and SABMiller — two of the world’s largest brewers — agreement to team up and distribute their beer in the US and Puerto Rican markets. Before their merger, Sony and Ericsson entered into a JV to corner the early cell phone market.

If you are asked to consider the viability of a merger or acquisition in an interview case study, you might gain a few bonus points if you also say a few lines about joint ventures as an alternative. For instance, if one party has concerns over the other party’s long-term performance, JVs can be drafted in such a way to limit the venture for a certain period.

How is this topic relevant to law firms?

JVs entail substantial contractual, structuring, and tax implications.

Naturally, parties to a JV need experts to advise them on these matters. For instance, will BT and Discovery enter into a general partnership, where both parties have equal decision-making power? Or will one party provide a sum of money that the other party will actively manage under a limited partnership?