Have BT and BSkyB bosses scored an own goal over football rights?

In a move that stunned many in the TV industry, Mr Livingston has splashed out ?738m for 38 Premier League football games a season in a three-year deal.

BT's entry into the football market for the first time, ousting previous incumbent ESPN, was surprising for two reasons. First, Mr Livingston forced Mr Darroch to fork out ?2.28bn to keep hold of the rest of its rights for 116 games ? up from ?1.62bn in the last auction. Second, it showed that Mr Livingston was up for a fight by parking BT's tanks squarely on Sky's home turf of Premier League football.

The two companies have been encroaching into each other's territory for years. Sky made significant in-roads into the broadband and home phone market from 2006 while BT got involved in pay-TV with less success in the same year.

It is clear that Mr Livingston plans to change that, reckoning that an investment in premium football will finally pull in the punters. Despite having many millions of phone customers, BT has only 700,000 TV customers ? against Sky's 10.3 million.

The City gave an initial thumbs down to the deal, with shares in Sky and BT tumbling on fears they overpaid. The ?3bn total raised in the TV rights auction was up almost 70 per cent on the last deal.

Sky was the biggest faller on the FTSE 100 at one point yesterday, diving over 8 per cent, before easing back to close down 3.5 per cent. BT tumbled as much as 5 per cent but also ended down 3.5 per cent.

Analysts reckoned the companies face real challenges. Both are paying about ?6.5m a game, compared to the ?4.7m that Sky was spending previously. The broker Investec claimed that the result "looks mixed/negative" for Sky. "BT arguably looks a more potent competitor than ESPN, even if we have some doubts over its content strategy and pay TV product performance to date," Investec said.

There is arguably a bigger doubt hanging over BT, which doesn't have any track record in making TV programming. This is a big gamble by Mr Livingston, who will be acutely aware how ITV Digital and Setanta both lost many millions fighting in vain over football. ESPN, backed by Disney, has had to give up too.

Some in the City were unconvinced after BT's conference call with analysts, immediately after the auction result, when the telecoms firm admitted there would be a hit to profits ? unlike Sky. "I think BT are overestimating their own capabilities and underestimating Sky's," said one source, who asked not to be named.

But Mr Livingston has spent heavily for 18 "top picks" a season, which gives it the right to show clashes involving top clubs such as Arsenal vs Manchester United. Investment bank Jefferies reckoned BT's investment would pay off.

Underlying all this is the fascinating personal relationship between Mr Livingston and Mr Darroch. They are similar ages and worked together at Dixons between 2000 and 2002. Mr Livingston, from Glasgow, had already been there for years, having been made finance director at the age of just 32.

So when Mr Darroch, who is older and hails from Northumerland, joined in 2000, he held the more junior role. Mr Livingston's departure for BT as finance director in 2002 opened the way for Mr Darroch to take over as FD at Dixons, before landing the same job at Sky in 2004.

Mr Darroch was made chief executive in 2007, six months before Mr Livingson at BT. Both still work together professionally from time to time as Sky uses some of BT's telecom services and BT sells some Sky channels.

There is a bigger picture here. Sky and BT are in a war with Virgin Media and others such as TalkTalk to win customers in the "triple play" market of pay-TV, broadband and phone. Virgin, the second biggest player in pay-TV, has 3.8 million customers but no exclusive football, so may be worried by BT's new move.

Both Sky and BT are promising to let their rival carry each other's football coverage. However, fans know prices will rise and the British Beer & Pub Association is urging them not to impose huge price increases for pubs.

The TV rights deal doesn't kick in until next August. It could be the most intriguing chapter in the overlapping careers of Messrs Darroch and Livingston.

Sky pulls strings: Its rivals flop

Sky has made a monkey of every rival that has tried to take it on in pay-TV football. ITV Digital failed spectacularly, going bust a decade ago. The only memorable aspect of its efforts was the comic puppet that was created for its marketing campaign.

The Irish firm Setanta came next, buying rights to 46 games from 2007, after Brussels ruled that Sky could not have a monopoly on TV football. It was a sorry experience for Setanta as it had to spend heavily against Sky, did not have the best pick of the games, and had a reputation for poor customer service.

Setanta's collapse in 2009 was an opportunistic moment for America's ESPN to scoop up rights. The Disney-owned broadcaster didn't make the mistake of trying to outdo Sky. Instead ESPN got Sky to supply live pictures and give other support.

But ESPN never got much traction. The Setanta legacy means it has only 23 games at present ? not even a game a week ? against Sky's 115. And with the latest rights proving so expensive, Disney has quit.

The latest entrant in the jungle, BT, will need to be at its smartest to cope with the gorilla that is Sky.

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