BBC News Online: Business

Granada takes Arsenal stake

Arsenal is expected to use the money to pay for a 60,000 seat stadium at Ashburton Grove in north London. Once this stadium is approved, Granada is expected to increase its stake in the football club by 4.99%.

The two companies are to form a joint venture to exploit Arsenal's new media rights, including delayed coverage of the club's Premiership matches. The joint venture will be called AFC Broadband.

Many broadcast companies have been rushing to buy stakes in football clubs, in the hope that this may help them secure future broadcasting rights.

Cable company NTL has stakes in both Newcastle and Aston Villa footbal clubs while BSkyB has bought stakes in a string of football clubs, including Leeds United.

Media moves

Speculation that a deal was imminent had boosted Arsenal's share price in early trade. Shares in Arsenal were £100 higher at £3,600 on the unofficial Ofex market.

Granada Media already owns a 9.9% stake in Arsenal rivals Liverpool.

Arsenal football club had previously held talks with Carlton Communications, but these talks fell through when the two companies failed to agree a price.

Steve Morrison, chief executive of Granada Media said the new joint venture "is central to Granada's strategy to offer innovative, enriched and personalised internet and broadband services to affinity communities, for example fiercely loyal football fans around the world, bringing them closer to their passion, Arsenal FC."