Analysts say the telecoms giant is trying to defend its broadband base and the new TV service will lose up to £300m in first year
BT's TV operation is forecast to make an operating loss of as much as £300m in its first year, with analysts unconvinced that its offer of "free" sports will be enough to topple BSkyB's dominance.
The telecoms operator is to offer a host of its sport content, including Premier League football, free to customers who take its broadband service, which costs from £10 to £15 a month.
The company says it is not aiming to steal Sky TV customers to build its BT Vision and YouView service, but to use television content to make sure it remains dominant in its broadband heartland.
BSkyB has been adding about 35,000 more broadband customers per quarter than BT since 2008, and has rapidly grown to 4.4 million subscribers. BT remains the UK broadband market leader with 6.7 million.
"We believe this is an aggressive move by BT and will help the company defend its existing broadband base, making it easier to retain and attract new customers," said Giasone Salati, an analyst at Espirito Santo Investment Bank. "In reality though, BT's pricing point doesn't seem to be aggressive enough to be a 'game changer'."
This is backed up by several analysts, with Citi estimating that the net savings of a Sky "sports nut" looking to move to BT would only be about 55p per month.
Espirito Santo Investment Bank reckons the saving will be about £2.60 for a customer who moves three services from Sky to BT.
Claire Enders, founder of media business consultancy Enders Analysis, says the "free" strategy means BT is paying a high marketing price to defend its broadband position, with perhaps only 1 million to 1.5 million Sky customers likely to want to also buy BT Sport in order to have all Premier League football.
"It will neither have material impact on TV subscriptions to Sky, Virgin Media and TalkTalk, nor on Sky commercial revenues," she concludes. "It is a high marketing price to pay."
Enders Analysis estimates that BT's TV service will have operating costs of £450m a year, and can expect to make a direct annual operating loss of £250m to £300m.
A key target for BT will be to retain the 2m households who are thought to be Sky TV customers and also have BT broadband contracts.
The fear is that the constant marketing bombardment from Sky could eventually convince them to switch broadband supplier.
There is also a significant headache for BT on the marketing front.
BT broadband customers will be able to receive its new sports channels over iPhones, iPads, Android devices and online.
Sky customers unwilling to move to BT can pay from £12 a month on top of their satellite subscription to get its sports channels, which will launch in the summer with live Premier League action.
BT also runs two interactive pay-TV services: YouView, which does not have a deal to broadcast Sky Sports 1 and 2; and its older product, BT Vision, which does.
"BT's offer is too complicated to attract the masses and it is far from being a better alternative to attract the core fans," said Salati.