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Murdoch goes for double with club and TV deal

"The calculations behind the buy-out are straightforward. Sky needs must-buy with club and TV football deal content to convince viewers to subscribe, especially to its 200-channel digital service"

By Stuart Millar and Janine Gibson
Tuesday September 8, 2020

It was a revelation which threatened to turn British football on its head. Fans were in uproar, protests were being planned and politicians were lining up to make ominous noises. They need not have worried; Rupert Murdoch's daily newspapers yesterday assured them the proposed buy-out by his BSkyB of Manchester United was a godsend for the club and the game.

Even in the normally sober pages of the Times, the welcome could hardly have been more effusive. Under the headline A marriage made in Heaven for United followers, Oliver Holt, its football correspondent, told readers that the buy-out should be a source of rejoicing at Old Trafford, giving United the financial clout to bring the best - and most expensive - players to the club.

"For United fans to rail against the takeover is like a group of lottery winners covering their ears when Camelot rings with the good news," he wrote. "It is for the rest of football to worry. United supporters should sit back and enjoy the ride."

The Sun went even further, proclaiming itself "Sky-ly delighted" with an exclusive informing fans that if the deal goes ahead, United's ticket prices will be frozen for five years. It also had no less a United aficionado than Radio One presenter Zoe Ball praising the tie-up in the most glowing terms, ie it would bring a lot of money to the club.

The positive coverage was perhaps to be expected. But it also underlined the extent to which ownership of the world's richest club would fit neatly into the Murdoch empire, and how uniquely placed that empire is to exploit football's most recognised brand.

From the initial spin to delivering United matches, domestic and European, around the planet, it is difficult to imagine any organisation which could match the global infrastructure Murdoch already has in place.

The calculations behind the buy-out are relatively straightforward. Sky needs must-buy content, ie Premiership football to convince viewers to subscribe, especially to its new 200-channel digital service.

It is significant that the Murdoch executive behind the deal is BSkyB chief executive Mark Booth, whose responsibility it is to sell the little grey digital dishes. He is having a tough time convincing city analysts that the Sky Digital proposition will cut it - he has yet to come up with the element which will send subscribers running to the shops at Christmas. Though Sky sources said yesterday that their primary motivation is "buying a good business", the broadcaster is betting substantial sums that digital satellite broadcasting will take off, and the only way it knows to ensure that is by offering some kind of unique football coverage.

Since 1992, it has parted with enormous amounts of cash to secure exclusive live television rights for Premiership matches, but a new revolution is about to unfold. The Premier League contract has only one full season left to run after the present one, and the consensus in the industry is that after 2001, the biggest clubs will go it alone. That could happen even sooner if the Office of Fair Trading wins a case at the Restrictive Practices Court next year which seeks to have the Premiership judged to be a cartel.

Murdoch has sensed change is in the air and decided to act early. Put simply, buying a club for its television rights could work out cheaper in the long run than renting those rights. By buying the biggest club of them all, he will not only be guaranteed coverage of United's matches but will also be in a much stronger position to convince other clubs to go with Sky.

"All the big media players had looked at buying clubs before but they decided it wasn't worth it," said Mathew Horsman, a media analyst with city brokers Henderson Crosthwaite. "But Murdoch is taking the risk because he anticipates a trend shift."

The implications for the rest of the Premiership are enormous. Sky is, and is likely to remain, the only broadcaster with the capacity to offer true pay per view football. In May, the 20 top-flight clubs rejected Sky's pay per view proposition for the current season, but it is widely accepted that this was only a temporary setback.

Given that the Premier League chairmen have already acknowledged, at least in private, that pay per view is the only way forward, it must be of concern to know that their lead force will be on both sides of the negotiating table - a factor which will become even more important after the likely demise of the current collective deal between the league and Sky.

With United setting the lead, the other big clubs will not hesitate to follow. Observers predict that up to six will decide they have more to gain by selling their television rights individually. That would remove any possibility of United being sidelined or expelled for refusing to toe the collective line, even if the remaining clubs wanted to negotiate a single television deal after 2001.

Matthew Glendinning, a writer on football finance said: "A lot of people have assumed that United is big enough to do whatever it wants. I'm not sure how true that was in the past, but with Sky's money behind them it will be true in the future. So while United and the bigger clubs go off and strike their own deals, probably with Sky, the Premier League will be left struggling to maintain some semblance of being a viable entity."

As a result, the smaller clubs must be asking themselves what negotiating power they will have under in the bright new world of a Sky/United-dominated Premiership. The solution may lie in forming smaller alliances to strike television deals, perhaps on a regional basis.

Alex Fynn, a former adviser to United and the Football Association, said: "In the worst case scenario, Murdoch will become a first among equals around the Premiership table and so will be able to exert a heavy influence over the shape of future television deals.

"In the best case scenario, television rights will devolve back to the clubs both in Britain and in Europe and then Murdoch is a position to make such a fortune from United's television rights that it will make the 575 million bid look a small price to pay."

This is where Murdoch's infrastructure comes into its own. Sky is already one of three partners in United's own digital channel, MUTV, which offers subscribers team news, old games and player interviews. But in the post-2001 regime, it could be in a position to broadcast live coverage of United's games, vastly increasing its potential.

The money-making possibilities are not just limited to the club's British base of around 3 million fans. United is a global brand and Murdoch is a global player, with television interests on most continents. In Asia, fans stay up until dawn to watch live coverage of the Premiership on satellite.

"He is uniquely placed," said Mr Horsman. "He can broadcast into South America, he can broadcast into the Asia, he can broadcast into the Far East and he can broadcast into the United States." And with the games, inevitably, comes the merchandising. "Mr Murdoch does believe that there is a huge related market, not just the football, but related merchandising opportunities in his global conglomerate," said Bob Nobay, senior associate at the London School of Economics financial markets group.

With the prospect of Murdoch using his burgeoning interests in China to deliver United games, pundits are already talking of a whole new generation of Red Chinese.

 


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