Rubert Murdock is set to buy the worlds biggest brand football club, Manchester United, in a Stg£625m ($1bn) bid through his satellite broadcaster BSkyB. Two weeks ago Manchester United was valued at Stg£400m, or 160p per share. Which was 20 times the earnings per share United is likely to make in the financial year just ended. Now BSkyB is paying Stg£625m to take control, a multiple of 31 times expected 1997/98 profits.
In July The Sunday Tribune published a report by the Japanese company, Nomura, that said United would be purchased by BSkyB because it was undervalued because the stock market had categorised it, wrongly as a football club or leisure group rather than a financially more attractive "media asset". Ownership of a premier football club will get Murdock closer to his goal of Pay-Per-View matches which has previously been ruled out by the Premier League and UK competition authority. But if the deal goes through Murdock would be sitting at both sides of the table during the next negotiations.
The Office of Fair Trading argues that the existing BSkyB agreement with the Premiership operates against the individual clubs and the public because it is negotiated collectively. If the Restrictive Practices Court agrees it can strike out the deal. Television rights would have to be negotiated on a club by club basis. Digital TV means anyone can become a broadcaster therefore the distribution system becomes less important than owning the content on the broadcasts. Owning Manchester United means he can also negotiate to broadcast other clubs without owning them.
In an added Macheveallian twist, rumours have surfaced that he is close to securing a deal in Italy with Silvio Berlusconi, the Italian media tycoon who owns soccer club AC Milan and 10% of pay TV group Telepiu. France's Canal Plus, which controls the other 90% of Telepiu, also owns Paris St Germain. If a deal could be struck involving three of Europe's biggest teams, Murdoch could relaunch his recently shelved plan for a European soccer superleague and have enormous control over live sport which is the most valuable commodity in pay TV.
Two years ago Murdoch told the News Corporation annual meeting that sports "absolutely overpowers film and all other forms of entertainment in drawing viewers to television. We have long term rights in most countries to major sports events and we will be doing in Asia what we intend to do elsewhere in the world - that is use sports as a battering ram and a lead offering in all our pay television operations"
BSkyB's offer has been approved by the clubs leading shareholders, but still needs approval from the UK competition authorities and there is also growing anger among the fans of the club and football in general.
Michael McMahon 17/9/98
