BSkyB was in demand earlier in the week after UBS suggested Rupert Murdoch could take another tilt at the satellite broadcaster, or that Vodafone or O2 could be interested in a merger.
But its shares have come down to earth a little following a more downbeat report on the business from Credit Suisse on the prospect of the company putting in a knockout bid for the next Premier League rights to knock upstart bidder BT out of the game.
The bank said the next rights auction was likely to be the most competitive in the league's history. It said:
We think the best strategy for Sky to eliminate the risk of content cost inflation in the long term is to increase its control over FA Premier League content and force BT out of the wholesale content market.
In short, we think the rational strategy for Sky is to acquire six packs, take the short term hit to earnings, but then reap the longer term benefits from reduced competitive intensity.
We calculate that Sky would rationally pay £1.2bn per annum for five packs to protect the economics of the basic buy-through model, which could unravel if BT won control of Premier League content. We also highlight that Sky could justify £1.6bn per annum for six packs, if this forced BT out of the wholesale content market and resulted in lower future Premier League inflation.
Ahead of BSkyB's second quarter results 30 January, Credit Suisse reduced its 2017 earnings per share forecast by 13% to reflect higher Premier League costs and cut its target price to 600p from 700p.
In the market BSkyB has fallen 21.5p to 848p, while BT is down 3.9p at 382.1p.
