It was confirmed this weekend that Rupert Murdoch’s BSkyB is in takeover negotiations with Manchester United football club and is expected to make a formal offer some time this week. It is believed that the offer values the club at 225p per share: this translates into a cash value of £575 million.
Media mogul Murdoch already holds the rights to broadcast live Premier League games exclusively through Sky, but this contract will expire in 2001. The sports broadcasting market, however, is a lucrative one, and it is reported that Murdoch has expressed a desire to enter the world of Premier League football through a more direct route.
Perhaps another catalyst to Murdoch’s decision to buy into football is the realisation by the League and its clubs that there is a lot of money to be made in broadcasting live games to fans. The capabilities of digital television will allow each club to effectively run its own channel thus cutting out the middleman broadcaster which, in this and many cases, is Sky. BSkyB will doubtless be keen to secure broadcasting or takeover deals with Premier League clubs before this starts to happen.
However, any such deal will be investigated by the Office of Fair Trading (OFT), as are all takeovers. The OFT will examine whether or not the buyout will have competition implications – restricting the access to televise Man Utd. games, for instance. If the OFT finds that there are implications of this nature the deal would be referred to the Monopolies and Mergers Commission (MMC).
BSkyB is already being taken to the High Court by the OFT over a broadcasting deal struck between the Premier League and Sky in 1993. The OFT claims that Sky made the deal, to broadcast games between 1993 and 1996, without first obtaining the OFT’s consent (see OFT Takes BSkyB And Premier League To Restrictive Practices Court).
Man Utd.’s recently launched digital TV channel, MUTV, is part-owned by BSkyB, Granada and the club itself; it is initially only available through Sky (see Man Utd. Launches Own TV Channel).
It is expected that other clubs may join the bidding now that Sky has got the ball rolling. Other possible players include Granada, United News & Media and leisure group Enic. However, any such takeover is likely to meet with resistance. Already sports minister, Tony Banks, has said that the Sky talks should “set off alarm bells” and described the potential deal as having “profound consequences”.
As a result of the talks, shares in Manchester Utd. have soared by 56p (35.2%) to 215p at 10:45am this morning; shares closed at 159p on Friday. BSkyB was also up this morning by 18p to 480p.
Manchester United: 0161 872 3488 BSkyB: 0171 705 3000
