- The Government today announced that it had blocked the BSkyB's £625 million bid for English premier league football club, Manchester United.
Stephen Byers, secretary of state for trade and industry, said he accepted the findings and recommendations of the Monopolies and Mergers Commission, and the advice of the Office of Fair Trading that the merger may be against the public interest and that it should be prohibited.
BSkyB, which is 40 per cent owned by Rupert Murdoch, made its bid for the club last September, not long after the 98/99 season kicked off.
The bid was backed by Manchester United's shareholders and it was widely anticipated that the Government would give the go ahead to the deal.
The secretary of state said that the MMC's findings were based mainly on competition grounds but they also examined wider public interest issues, and concluded that the merger would damage the quality of British football.
According to Byers: "The MMC concluded that the merger may be expected to reduce competition for the broadcasting rights to Premier League matches. This would lead to less choice for the Premier League and less scope for innovation in the broadcasting of Premier League football. The merger would have brought together the leading pay TV broadcaster and only significant provider of sports premium channels on the one hand and the biggest and most successful English football club on the other. Under almost all scenarios considered by the MMC, the merger would increase the market power which BSkyB already has as a provider of sports premium channels."
He added: "I agree with the MMC that the advantages which ownership of Manchester United would give BSkyB over other broadcasters in future sales of Premier League broadcasting rights would substantially increase its chances of winning those rights and would deter some other broadcasters from competing for them."
Byers said that he also agreed with the MMC that BSkyB's enhanced ability to win the Premier League rights would restrict entry into the sports premium channel TV market, which would in turn feed through into reduced competition in the wider pay TV market.