Sky’s Man Utd bid puts Murdoch a step ahead of media competition

If the Office of Fair Trading allows BSkyB’s proposed pounds 625 million takeover of Manchester United to go beyond the present stage of concurrent outrage and hysterical approval (depending on whose newspapers you read) it will be one of the most important landmarks in British broadcasting.

If the Office of Fair Trading allows BSkyB’s proposed pounds 625

million takeover of Manchester United to go beyond the present stage of

concurrent outrage and hysterical approval (depending on whose

newspapers you read) it will be one of the most important landmarks in

British broadcasting.



Until now, the standard procedure has been for television companies to

bid against each other for live sporting rights. The one that bids the

highest generally wins the day. The rules are simple.



But when the dust settles on this deal and Man United’s chairman, Martin

Edwards, has trousered his millions, Rupert Murdoch will have moved the

goalposts. Under the new rules, the only bidding that matters will be to

buy the owners of those rights and, once the deal is done, that will be

that. Assuming the Man United deal goes through, the idea that ITV, the

BBC or Sky’s digital rival, ONdigital, will ever acquire live rights to

matches from Old Trafford is doubtful.



Murdoch, as usual, has proved himself to be a step ahead of his media

competitors in understanding the power of sporting ownership. However,

the signs have been there to read for some time - since spring, in fact,

when Murdoch’s Fox Network bought the Los Angeles Dodgers baseball team

in order to keep a hold over its broadcasting rights.



This strategic business aim is the only thing that matters to Murdoch -

which is why comparisons with the past activities of other media moguls,

including Robert Maxwell (at Derby) and even Silvio Berlusconi (at AC

Milan), do not stand up. Murdoch is not buying Man United for prestige.

The timing of the move is designed to protect Murdoch’s interests prior

to the Office of Fair Trading’s investigation next year into Sky’s

current deal with the FA Carling Premiership. If the OFT rules that the

Premiership is an illegal cartel, clubs will be free to negotiate TV

rights individually. Even if the OFT decides in favour of the current

deal, it expires in 2001, when the clubs will probably opt to sell

individually. Not that Man United will be selling anything now.



Immediately after news of the Man United deal broke at the weekend,

stories began appearing in the press linking the likes of Carlton and

United News and Media with other top clubs, such as Arsenal. Whether

they are in talks already or not, they know that they will have to get

cracking if they are to keep up.



Still, no-one really knows what the future of live televised football

means for advertisers. Theoretically, both in the UK and abroad, the

broadcaster could milk every penny out of the club’s addicted fans,

using a pay-per-view model to generate revenue that goes way beyond what

traditional advertising and sponsorship could bring in.



Does this mean that advertisers will be excluded from the coverage? Even

if ad breaks do feature, they may suffer from a viewer backlash at the

prospect of having to watch commercials as well as forking out extra

cash to watch the games. Paul Longhurst, the former media director of

Ammirati Puris Lintas and currently a consultant on interactive TV,

warns: ’It is possible that advertisers would lose out through bad

viewer relations.’



Longhurst also points to the possibility that all the club’s media

properties - from airtime sales and sponsorship to in-stadium ad

hoardings - could be folded into a single sales point in order to

leverage consolidated benefits.



Adam Crozier, the joint chief executive of Saatchi & Saatchi, who has

worked as an adviser to the Football Association, believes the

short-term effect of a takeover will be largely emotional, but says Sky

is playing a long game.



’Sky is trying to make sure it is in pole position. If it can show it

can run a successful Man United TV station, maybe it can then sell the

idea on to other clubs with proof that it has the experience and can

provide the service cheaper and better.’



The whole question about whether the takeover is anti-competitive looms

large. Crozier says: ’It would be difficult to prove. You would have to

prove there is suffering and you just can’t do that in this

situation.’



Bob Offen, the Man United-supporting chief executive of Mediapolis,

says: ’It won’t allow Murdoch to dominate the sport any more than he

already does. It gives him a potential seat at the top table in terms of

future negotiations over broadcasting rights but unless Man United is

playing in a league of its own, the other teams theoretically have a

voice too. There has to be a consensus.’



Other issues for Murdoch to weigh up include the effect this acquisition

might have on his existing UK media properties. Just as the launch of

Sky led observers to sneer at its coverage in News International

newspapers, observers anticipate coverage of Man United might now be

different in the Sun and the Times. This could work either way for News

International: the newspapers’ credibility could be bruised if their

coverage is perceived as being partial, or their sales could rocket if

they are regularly given exclusive Man United news.



And while this whole extravaganza is a commercial event, the power of

the fans should not be underestimated. The club’s Independent

Supporters’ Association is already talking about calling for a mass

boycott of Murdoch’s media.



On the whole, media buyers are taking the deal in their stride, happy to

let the success or otherwise of pay-per-view football fall to the laws

of supply and demand. Jim Marshall, chief executive of MediaVest, says:

’Who owns the club and the pay-TV supplier won’t count for an awful lot.

It entirely depends upon the service.’



Comments p21 and p47.



INDUSTRY OPINIONS



Paul Longhurst



’It is possible advertisers would lose out through bad viewer

relations’



Adam Crozier



’Sky is trying to make sure that whatever happens it is in pole

position’



Bob Offen



’Unless United is playing in a league of its own, the other teams

theoretically have a voice too’



Jim Marshall



’Who owns the club and the pay-TV supplier won’t count for an awful lot.

It entirely depends upon the service’.



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