The BBC’s Olympics coverage faces its most serious threat as BT Sport customers automatically get wall-to-wall coverage in the telecommunication firm’s £540 million sell off to Warner Bros Discovery.

A year after Telegraph Sport revealed BT was looking to offload its sports broadcasting arm, a deal has now been sealed for the British broadcaster to merge under one brand with Eurosport.

Marc Allera, chief executive of BT’s consumer division, played down fears of any imminent price rises for current customers as he faced questions for the first time during the deal’s launch.

One element of the deal that will most worry BBC chiefs is that BT Sport will get immediate access to Discovery+, which is now the only broadcaster with rights to show every Olympic medal event live.

The BBC had controversially lost automatic hosting rights in 2015 after the International Olympic Committee allowed the American giant Discovery to table a £920m offer which blew rivals out of the water. Under Government ‘Crown Jewel’ broadcasting arrangements, some Olympics coverage is guaranteed free-to-air. However the BBC prompted complaints from viewers about missing key moments in Tokyo as it was only able to secure two live events at a time under the terms of a sub-licensing agreement.

Allera, of BT, said there were huge benefits for BT subscribers from the new deal. “The product for BT Sport customers will enhance and they will be getting more content versus what they get today, both on the sports side and on the entertainment side, with Discovery+,” he said.   As it stands current subscribers will “get more than you get today for the same price, but prices change over time in any market”.

In February, BT said it was in exclusive negotiations with Discovery after completing a lengthy review of its BT Sport operation. It will now form a 50-50 joint venture which will bring together BT Sport and Eurosport, and they will eventually merge into one brand. The new statements suggest that, for the short term, BT’s Champions League and Premier League coverage will retain the same logos, commentators and presenting teams. In the longer term, there is bound to be significant change.

JB Perrette, a chief executive and president of streaming at Warner Bros Discovery, announced the deal in the same week that Uefa agreed on Champions League reforms which will lead to more games available to broadcasters.

Football will remain a key part of the BT offering but he played down the prospect of another surge in Premier League and Champions League rights prices. “I think the issue is not this deal, frankly, as it relates to pricing,” he said. “I think it relates more to the pay TV ecosystem that’s supported the pricing of sports, not just in the UK, but around the world and the future of the pay TV ecosystem and what it can sustain is a fundamental and real question for a lot of rights holders. The heyday of the last few decades of just up and to the right in terms of subscriber growth and pricing growth is definitely not what it used to be. And so there’s going to have to be some rationalisation of sorts.”

BT said the two brands will initially stay separate but will ultimately be brought “together under a single brand in the future”. The London-listed firm said it will immediately receive £93m from Warner Bros Discovery, and up to £540m if future conditions are met.

The Premier League has also been consulted over the sale since February. Dazn, the streaming challenger bankrolled by the billionaire Sir Leonard Blavatnik, had initially been the front-runner to secure a deal, but Discovery gatecrashed an agreement.

BT Sport’s deal with the most lucrative domestic league in the world expires in 2025 so the 20 clubs would be entitled, in theory, to derail a takeover. However, approval is all-but-certain for the two potential suitors involved. BT will also need a green light from Uefa because it has rights for the Champions League and Europa League.

BT Sport paid £385m for the live rights to 52 Premier League matches a season from 2019 to 2022. The deal was rolled over for another three years as part of an agreement involving Government to minimise the financial impact of Covid.

Confirmation of a deal came as BT told shareholders it met expectations with a two per cent increase in earnings to £7.6 billion for the year to March, as cost savings offset lower revenues.

BT said it will extend its cost savings plans to save £2.5bn by the end of 2025, amending previous targets of £2bn in savings by 2024.

Cost reductions have helped the company absorb some inflation pressures, it added. Revenues for the year dropped by two per cent to £20.8bn, driven by lower sales in its enterprise and global businesses, although the firm benefited from a strong performance by its Openreach network business.

Q&A: What forthcoming merger means for viewers

Will prices for current BT customers go up?

Initially not, but they are bound to edge up in the long term. “It does not sound like prices for consumers will increase as a direct result of this deal, at least not initially,” says Julian Aquilina, a senior research analyst at Enders Analysis. “BT has said that customers who get BT Sport directly from BT will receive Discovery+ as part of their existing subscriptions.”

Marc Allera, chief executive of BT’s consumer division, had moved to play down fears of a price hike when he was quizzed – but he declined to make any firm long-term commitments. “The product for BT Sport customers will enhance and they will be getting more content versus what they get today, both on the sports side and on the entertainment side with with Discovery+,” he said. “Then the pricing for that will be in line with the way the customers’ contract is created, whether it’s a standalone service, like a monthly pass or a bundled service from us or a bundled service from someone else. It depends, is the answer. But the approach certainly, if you’re a customer today and we could execute this today, you get more than you get today for the same price, but prices change over time in any market.”

With an American broadcasting giant seizing control, will BT remain a fierce rival with Sky?

Yes, although the days when BT regularly attempted to blow Sky out of the water with huge bids had already long gone. There is much more communication between the broadcasters now, and the pair worked together closely to sign off the rollover agreement that saw the Premier League’s three year cycle continue at the same rate as the previous deal.

JB Perrette, a CEO and president of global streaming Warner Bros, suggested it was wrong to suggest his company was planning to launch “a sort of attack on Sky”.

“The reality is we have a long standing and great relationship with Sky,” he said. “The market stands very well in having two great sports services. We like that dynamic. I don’t think there’s a need to have monopoly positions, which is obviously not allowed in a lot of places. So I think there’s a very healthy ecosystem that allows for a great and robust offering for two great sports services and there may be others in certain areas that evolve.”

When asked which sport the new combined broadcaster would prioritise during future bids, Allera said: “There is no doubt the highest viewing figures are for the football. But it’s important to have a balanced portfolio of great rights and the Olympics is just one of a number of products that we can bring to our customers that they weren’t getting access to before. That’s a great example of why this is a really good thing for customers.”

How will the deal affect long-term rights values for the Champions League and Premier League?

The Premier League and Champions League remain by far the most valuable commodities in sports rights, but, in the domestic market at least, the market has flattened. Warner Bros and market analysts see no reason for current trends to change. “Of course, the combined entity will remain a major rival to Sky, but they are also important partners to each other, and that will ensure too,” says Aquilina, of Enders. In February, BT announced that its cross-wholesale TV content deal with Sky will ‘in principle” be extended beyond 2030. “This signals that a return to aggressive bidding on premium sports rights is very unlikely, meaning there is less likelihood of higher programming costs needing to be passed onto consumers,” Aquilina added.

Perrette agreed that trends in pricing will be unaffected by the deal.The general “future of the pay TV ecosystem and what it can sustain is a fundamental and real question for a lot of rights holders”, he said, “because the heyday of the last few decades of just up and to the right in terms of subscriber growth and pricing growth is definitely not what it used to be”.

“There’s going to have to be some rationalisation of sorts, as that market and platform continues to evolve and move more inevitably towards a direct to consumer future, which doesn’t have the current economics certainly that the traditional pay TV ecosystem did,” he said. “So I think there will just have to be some rationalisation, not just on economics but also on how you go to market as a rights holder.”