BSkyB is to launch a dedicated football channel, Sky Sports 5, that will screen more than 600 live European matches next season.

It is a significant response to BT, which has been showing Premier League games and has secured exclusive rights to the Uefa Champions League from 2015. BT suffered an immediate blow to its share price after Sky's announcement.

Sky Sports 5 will carry the European qualifying matches, Spanish and Dutch live football plus - for just one more year - the Champions League.

The coverage of Holland's top league, Eredivisie, is the only new part of Sky's package.

In announcing the launch, Sky Sports managing director, Barney Francis, said the new channel takes Sky's football coverage "to the next level" with more European football than ever before.

It also quotes "Sky ambassador" David Beckham enthusing about "the drama and excitement that European football has to offer."

But dispassionate observers are not so excited. The Financial Times quotes the views of Berenberg Bank equity research team, who expressed doubt about Sky Sports 5 attracting more customers.

The FT article also states that analysts believe Sky and BT "could now be locked into a battle for sports TV and broadband customers that will force prices down and lead to overspending to acquire sports rights."

Sources: Sky Sports/Interactive Investor/Financial Times