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Thursday, 9 December, 1999, 11:35 GMT
Newcastle Utd's cable deal

St James Park


Cable firm NTL has become the latest broadcaster to sign a deal to take over the commercial operation of a major English football team.

It has increased its stake in Newcastle United to 9.8% and lent the club 25m in return for the rights to act as its commercial agent.

NTL withdrew its full takeover bid for Newcastle United earlier this year after monopoly authorities in the UK ruled out satellite broadcaster BSkyB's proposed takeover of Manchester United.

The new five-year deal gives NTL's wholly-owned subsidiary Premium TV exclusive rights to run a Newcastle Utd television channel, website and any other internet-related activities.

It will also become Newcastle United's main shirt sponsor from the start of next season.

Liverpool leads the way

Newcastle Utd is currently struggling near the bottom of English football's Premier League, despite spending vast amounts on players in recent seasons.

It has had to watch rivals overtake its spending power and also set up partnerships with other media groups.

BSkyB has bought stakes of just under 10% in Manchester Utd, Manchester City and Leeds Utd in recent months.

Terrestrial broadcaster Granada sparked the trend by investing in Liverpool football club in return for taking over its commercial and marketing operations.

Under the league's rules, companies are allowed to own stakes in an unlimited number of clubs as long as the holding in any of them never tops 10%.

Broadcasters are jockeying for position to secure the next wave of television rights for football, which has been the major weapon in the pay-TV market in the UK.

The advent of digital television has further multiplied the future commercial possibilities for clubs and broadcasters.

At present Premier League TV coverage is sold en bloc to BSkyB, with highlights packages shown on terrestrial BBC.

Near-doubled share price

Behind-the-scenes talks have already begun regarding the future televising rights after the current deal runs out in 2001.

Despite a recent court ruling in defence of the current joint deal, some of the larger clubs may still want to negotiate their own separate deals, as they already do for European cup competitions.

But even if it remains a league-wide deal, broadcasters know that they are buying themselves a place at the negotiating table through their purchase of club commercial rights.

The media/sponsorship arrangement NTL has agreed sees it providing a 25m interest-free loan, convertible into a further 9.9% stake in five years' time.

That represents a price of 155p per share, nearly twice the current price of 81p.

Newcastle United chairman Freddie Fletcher said the football club looked forward to working with NTL "to ensure that Newcastle United is in a position to capitalise on the expanding media opportunities and has the capability to compete with the very best in Europe".

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See also:
13 Jul 99 |  The Economy
Broadcasters battle for football
23 Nov 99 |  Business
Crackdown on BSkyB shares
05 Nov 99 |  The Company File
BSkyB buys into Man City
05 Oct 99 |  The Company File
BSkyB-Leeds United deal approved

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