NTL Unveils Media Partnership With Newcastle United

Newcastle United has formed a media partnership with NTL, in which the cable group will increase its stake in the club and obtain sponsorship and marketing rights in return for a £25 million interest-free loan. NTL will invest £5 million in Newcastle for an additional 3.6% stake; the repayment of its loan to the club could see the group eventually increasing its stake to 19.9%.

NTL’s interest in Newcastle has a long history: the cable group looked set to buy the club last year when it followed the purchase of a 6% stake with a full takeover bid (see NTL Is Front Runner To Buy Newcastle); NTL backed out however when the Competition Commission blocked a similar bid for Manchester United by BSkyB (see NTL Backs Out Of Newcastle United Bid). Now the cable group is set to increase its interest in the club as much as possible under Premier League rules.

A £25 million loan will be made by NTL to Newcastle; in return NTL’s Premium TV arm will become Newcastle’s main sponsor for the next five years and act as agent for all of Newcastle’s media and commercial interests. The company will also allow NTL to operate a Newcastle United television channel and to provide internet and e-commerce services associated with the club.

The loan, to be repaid in five years, can be converted by NTL into a further 9.9% stake in the club by the issue of Newcastle United ordinary shares to NTL, at the price of 155p per share. This will go against Premier League rules however, which prevent companies from owning stakes of more than 10% in more than one club; the group will be forced to reduce its stake over a three-month period.

Newcastle United is the latest in an increasing amount of football clubs to hand over its media interests to a media group. In the last year both Liverpool and Leeds United have entered similar deals (see BSkyB Takes £13.8m Stake In Leeds United) (see Granada Takes 10% Stake In Liverpool FC).

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