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Wednesday, September 9, 1998 Published at 08:26 GMT 09:26 UK


Murdoch's dash to the goal

Man Utd ownership sets up BskyB to televise matches

Why is BskyB, the British satellite broadcaster, so interested in taking over Britain's leading football club, Manchester United?

The answer lies in the future of the lucrative contract that gives BskyB the exclusive right to televise live premiership matches.

Rupert Murdoch's television company offered 623.4m for the team. The bid is worth 240p a share and is almost 50m more than original estimates.


[ image: Manchester Utd is big business for Murdoch]
Manchester Utd is big business for Murdoch
BskyB was happy to pay 670m in 1996 for four years of rights to English football - and was rewarded with the increased viewership that made the company the most profitable in British television.

But that contract expires in 2001. It could be a difficult and expensive battle for BskyB to secure those rights in the future. The ownership of one of the leading clubs could help smooth the way.

It could also ensure that BskyB was at the forefront of any developments - such as pay-per-view or a European super League - which may come about in the next few years.

Sport is Big Business worldwide

Rupert Murdoch has pursued a strategy of paying dearly for sports rights in order to boost his television channels around the world.

In 1993 his Fox Network in America outbid CBS to secure the rights to American football for five years.

The latest eight-year contract will mean a payout of $18bn over eight years.

But Mr Murdoch has also decided to secure his valuable US sporting interests by direct purchase of clubs. He has purchased the Los Angeles Dodgers, one of the leading US baseball teams, for $300m, and has taken stakes in professional basketball and hockey teams.

His main US rivals have followed the same pattern of using their ownership of teams to boost their television interests.

Ted Turner of CNN owns the Atlanta Braves baseball team, and sports network ESPN (partner of the Disney/ABC Network) owns a hockey team.

European deals

In Europe clubs in Italy, Spain and the Netherlands are beginning to sell TV rights to broadcast their games individually, rather than through the league. This boosts the revenues of the most popular clubs.


[ image: Former Italian prime minister Silvio Berlisconi has profited from AC Milan]
Former Italian prime minister Silvio Berlisconi has profited from AC Milan
In Britain Manchester United only receives 10% of the Premier League's revenues, although a recent survey suggested that nearly one in five fans support the club.

An even more lucrative way to cash in on the popularity of individual clubs could be through pay-per-view.

So far in Britain this has only been used in televised prize fights. By some estimates pay-per-view could raise up to 2bn, if as many watched per week as paid for live pay-per-view.

Pay-per-view has already arrived in Europe where Italy's Serie A league is televised live.

The league has recently decided to move its matches to Saturdays in order to boost its audiences.

Silvio Berlisconi, the former Italian Prime Minister and business magnate who owns AC Milan, is one of the prime movers for an all European league of football clubs, combining the best teams in a highly profitable televised series of matches.

Mr Murdoch recently considered taking a stake in Mr Berlisconi's media company, but was rebuffed.

BskyB under pressure

BskyB itself is under pressure as it converts to digital - launching a 140-channel service from October.

The company faces rivalry from terrestrial digital operator On Digital and cable operators.

The company is planning to spend heavily to promote its version of digital TV, and has said it will subsidise the installation of the new set-top boxes needed to receive the digital service.

Shares in the company had been depressed by worries that these launch costs would cut into the earnings of Britain's most profitable broadcaster.



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In this section

Inquiry chief reassures Man Utd fans

Bid rumours 'unfounded'

Countdown to the deal

Murdoch's dash to the goal

Murdoch's rise to the top

Who's afraid of Rupert Murdoch?

Man Utd: the jewel in football's crown

Is Mandelson a match for Murdoch?