David Peel
Reference Secretary
Monopolies and Mergers Commission
New Court
48 Carey Street
London
WC2A 2JT
Dear Sir,
I write in connection with the BSkyB bid to takeover Manchester
United and whether it is right for a media lead company to own a
football club.
Rupert Murdoch said in his speech to the News Corporation AGM in
Adelaide in October 1996, "what we intend to do elsewhere in the
world is use sports as a 'battering ram' and a lead offering in all
our pay television operations."
That's......... "a lead offering" and "a battering
ram".
We ARE talking about football here aren't we - "the peoples
game" and Murdoch talks of using one of the biggest clubs in the
world as "a lead offering" and "a battering ram".
I suppose that is all we can expect in this media dominated world of
ours and if it is, I think it's about time we did something about
changing the situation.
The media dominate our lives - they provide us with news through
TV, radio and newspapers. They determine what information we receive
and in what form we receive it. Some would go so far as to say they
dictate the way we live our lives, so keen is their influence.
How many times have you seen a personality on TV or heard someone
on radio and thought about how that personality has become a
caricature of themselves over a period of time because it has become
the general perception of them? Could this possibly happen in football
if a media company took control? It's already happened in TV wrestling
hasn't it?
Can you imagine the future staging of football games to suit the
audience? Sky already do this to a certain extent by altering the
kick-off times, but if they took complete control kick-off times
wouldn't be the only things to be altered. If the game were staged
solely for a particular audience would that be tailoring the game to
suit the viewers based on the perceptions already built up by the
media, and if it was, then wouldn't it cease to exist purely as a game
of football from that moment on?
If BSkyB bought the club would they really want United to win
everything all the time? Of course not - that would be bad business.
Vic Wakeling, MD of Sky Sports said, "What we don't want to
happen in English football is perhaps what's happened in Scottish
football. To take one example when Rangers won 9 Titles in a
row." It would alienate every Sky viewer who wasn't a Manchester
United supporter if they were to win constantly so it wouldn't be in
BSkyB's interest.
Surely this would then constitute a conflict of interests with
BSkyB and at least the supporters of Manchester United who DO want to
win everything on offer. That is the nature of the game and what every
supporter of every football club wants. If this is so then the
proposed takeover is against the public interest, at least against the
interests of Manchester United supporters.
Why has the farcical play-off situation come about in Rugby League
if not for the benefit of TV eking out the season and squeezing the
last drop of cash from the punter in a meaningless end of season sham.
Is this what we want for football, because if a media giant gets hold
of the game that is clearly what will happen.
It's not about entertainment - it's about lining the pockets of the
broadcasters and the football fat cats.
Murdoch has gained a position of power through controlling the
media. Andrew Neil, ex editor of the Sunday Times has said, "Murdoch
rules his companies like a monarch. News Corporation is a plc but
Murdoch is in total control.
"He has a global vision in which he controls both the product,
in other words the TV programmes and the news service and the means of
distribution."
The power of government is restrained by financial markets. Murdoch
influences financial markets just as he influences the rest of our
lives. It would be impossible to be the world's biggest media magnate
and not have that influence. He has TV and newspapers at his disposal
and they are the tools which allow him access to the minds of the
populace, and he uses those tools to great effect.
Lord Peyton of Yeovil said, "I take it that the noble Lord
would agree that control or influence over a large portion of the
modern communications network is the key to immense power and
influence and that Mr Murdoch's share of this network has been growing
steadily over recent years. Are the government not becoming a bit
nervous about that, and do they not feel that the point has been
reached when, in the words of a famous, long-ago Motion, it ought to
be diminished?"
The takeover bid is not about a mere company 'buy-out', it's about
a strategic purchase in order to sell Sky subscriptions. The bid was
timed to succeed before the result of the OFT court case with the
Premier League, ahead of the re-negotiation, after the Premier League
had rejected pay per view. It was a bid to secure the rights to
televise Premier League football and whoever owns those rights owns
the ultimate power to dictate the way the game of football should go.
What better way to achieve this other than by placing yourself on both
sides of the negotiating table by owning the most influential club in
the country - Manchester United.
Ultimately this would mean football would take second place to
television. TV would ostensibly own football, would dictate to
football and all it's followers. Not just to those of us who follow
Manchester United, but to everyone. We would be at the mercy of Rupert
Murdoch and his quest for world media domination.
Surely this cannot be in the best interests of the people who
follow the game. If the game were to fall into the hands of a media
magnate who is intent on promoting his subscription sales rather than
looking after the welfare of the club and the game of football. It
would set a dangerous precedent which would give the green light for
others to follow and gradually the game would be mere flotsam floating
on the media sea and the supporters, the jetsam cast upon the shore.
There seem to be two possible scenarios to take into consideration.
One is that the Premier League succeeds against the OFT and the BSkyB
deal is re-negotiated in 2001. BSkyB would then be in an extremely
powerful position to gain advantage over any other prospective
broadcasters. They could even threaten to withdraw Manchester United
from the league if they did not get their way on broadcasting rights.
They would most definitely have an unfair advantage over others, in
fact they would effectively be negotiating with themselves.
Manchester United are the dominant force in the Premiership and
what Manchester United do today, others do tomorrow, this has been
seen time and time again. For instance the attitude of Manchester
United regarding what was the Coca Cola Cup and now the Worthington
Cup, United would play a 'second string' eleven and were chastised.
They stood their ground and now this practice is commonplace amongst
the top clubs.
The other possibility is that the OFT win the case and the TV
rights are then sold by each individual club. BSkyB would own a club
which counts for a large share of the market which would again set
them up in an unfairly dominant position.
When Sky first came on air Premiership football was free. Gradually
the cost has risen so that it now costs 21.99 per month as part of a
package. That is 264 pounds per year, three times the cost of a
license fee. How will this equate if BSkyB are allowed to purchase
Manchester United?
And how will BSkyB fund the takeover?
Murdoch operates almost 800 separate business units across 52
countries, shuffling cash around as a matter of course. The overall
financial picture is further muddled by complex inter-company
borrowings and financings, and by complicated joint ventures. Murdoch
himself once conceded that the company's intricate financial interior
confused even some of his most senior executives. "One of the
things I would never attempt to calculate is how News Corp. arrives at
its tax rate, or why," said John Reidy, a Wall Street analyst who
has followed the company for years.
Who knows where, or in which account, our money would end up.
A study of Murdoch's companies undertaken by the Australian
Parliamentary Committee in 1989 (the only such study) revealed that he
declared all of its total annual profits through subsidiaries in
low-tax countries such as the Netherlands, Antilles and Bermuda. In
contrast, News Corp.'s main subsidiaries in Australia, Britain and the
United States, all relatively high-tax countries, recorded losses that
year.
News Corp.'s shareholder equity - essentially, the company's net
worth falls by nearly half the $16.7 billion it reported to investors
in Australia once U.S. accounting principles are applied, according to
SEC documents. The higher valuation is important because the greater
the equity, the greater Murdoch's borrowing power. The extraordinary
growth of News Corp. over the past dozen years has been fuelled by
Murdoch's heavy borrowing. At the end of the past fiscal year the
company had nearly $13 billion in outstanding debt and other
liabilities.
News Corp. is notorious for not securing loans with collateral.
Richard Sarazan says: "If a Bank wants to lend to us, we won't
take it unless we are satisfied it knows we're a company with very
complicated flows of money."
American media commentator Russ Baker says, "If ever someone
demonstrated the dangers of mass power being concentrated in few
hands, it would be Murdoch."
"Mr Rupert Murdoch has failed to deliver his forecast News
Corporation profit lift of 20 per cent, with the global media group
instead suffering a 29 per cent fall in net profit. Stockbroking
analysts are now reviewing their 1998 profit forecasts for News
Corporation. News Corporation said...it would use some of it's cash to
prop up it's share price" Matthew Kidman, Investment Editor of
the Sydney Morning Herald.
So how would Murdoch finance the United takeover?
David Docherty the deputy director of BBC TV: "Murdoch bets
the house. He builds cash cows. He uses that money to take other
business risks and has managed to dominate every industry he has gone
into."
"Business tactics outlined include a willingness to gamble the
whole company on one acquisition or project." Keith Beckstead,
from the PBS produced Frontline Video.
Again, it doesn't seem to be a very bright future for Manchester
United supporters, more a deal to prop up other Murdoch ventures.
Manchester United is already a successful business. They are a
global brand developed over the last decade based on the recent
success and the history of a great football club. Why does Manchester
United need Rupert Murdoch to help progress the brand when they are
doing fine for themselves. That side of the business turned over 28.5
million in the last financial year. The real answer is, they don't
need Murdoch at all. They have appointed their own brand director in
Peter Kenyon and have recently embarked on a series of ventures where
they will open club related shops in choice airports throughout the
world and the business in general is booming.
"Manchester United dominated the financial performance of all
clubs; their pre-tax profits exceed the whole turnover of Division
Three, and the club's operating profit is about 30% of all total
Premier League operating profits". Deloitte & Touche Annual
Review of football Finance 1998.
A football club is successful on the pitch due to the performance
of the team. Off the pitch it is successful because the fans buy the
tickets to watch the team and buy the merchandise to express their
allegiance. A football club may have turned into a plc, but it still
only exists because of the supporters and the team on the pitch.
Football is still essentially a game beloved of it's supporters.
Without the supporters football ceases to be. Without competition,
football is useless. Competition is vital and fair competition at
that. Not Rupert Murdoch's ideas of competition that's for sure.
Manchester United supporters have absolutely no idea what BSkyB
would be bringing into the club. There is no agreement that they will
be contributing one penny of their own money. There isn't a single
guarantee. Not one promise of anything.
What sort of agreement is this in that case, and why is the club
being sold such a fashion? It's surely not because Martin Edwards and
the rest of the board are going to make loads of money is it? It can't
be - can it? Surely they wouldn't sell our great club down the river
for personal gain?
They wouldn't - would they?
Patrick Harverson from the Financial Times has said, "It's not
such a great deal for United." Then why are Martin Edwards and
the board intent on selling the club to BSkyB?
There seem to be far too many personal agendas involved in this
proposed takeover. Rupert Murdoch desires TV world domination and this
is why he wants to buy Manchester United, not for any other reason.
If Murdoch gets his way Manchester United will be a subsidiary to
BSkyB which is under the control of News Corp. News Corp is run by
Murdoch - I know you could argue against that, but when has anyone
ever gone against Murdoch and survived? I doubt they ever have -
before now that is.
This deal, if it allowed to proceed and the precendent set, the big
clubs will become even bigger than they are now and the gap between
them and the rest of football will become wider and wider until it
will not be possible for any team to win anything unless they have big
money backing. If that is the result then football as we know it will
cease to exist and pure competition will be dead. The public will be
cheated into thinking they are still watching football but in actual
fact they will be watching a media merry-go-round.
This has now become a real opportunity for change, to set the game
of football back on it's true path. A path that supporters want to
walk. We recognise that football needs cash and the backing of the
media. What football does not need is to be dominated by the media. It
is surely about time those of us who follow the game are honestly
taken into consideration and are allowed a say in the development of
the game as a whole.
Football will always be a special case, once you choose a club you
stay with that club for the rest of your life. The club becomes part
of your culture. You develop a dependency on it and the club, in turn
are dependent on you. To take unfair advantage of football is like
rape, a violation. Football is a parochial game - allegiance is
tribal. We are essentially a captive audience, we cannot change our
affiliation. In everyday life, if we experience a poor show at a
concert venue for instance or receive poor service at a cinema we can
chose to go elsewhere, in football you HAVE NO CHOICE.
The government has shown a commitment to football. It has provided
the Football Taskforce to investigate aspects of the game and the
relationships with the supporters. The Football Taskforce is totally
opposed to this bid as are the PFA, the League Managers Association,
the independent fan's associations, the FSA and the Football
Association itself. In fact every governing football body. This must
surely count for a lot.
In conclusion:
The disparity between clubs in the Premiership is becoming wider
and wider. Manchester United's turnover is now more than those of the
other two top clubs (Liverpool and Arsenal) combined. This disparity
is reflected in the influence Manchester United have on the Premier
League. It could be argued that the League would not survive without
United. Whether that is the case or not, the League would be a much
poorer place without it's major force and attraction.
Rupert Murdoch owns the company which supplies the broadcasts,
Manchester United provide a great proportion of the content of those
broadcasts by being the major force in the Premiership. If BSkyB were
to be allowed to buy that content they would surely have an unfair
advantage over possible competitors and over the Premiership as a
whole. This cannot possibly be in the interest of the paying public.
20% of all Premiership broadcast involve United and the average
viewing figures when United are playing are 35% higher than when other
teams are involved. Seven of the top ten games for viewing figures
last season involved United.
Manchester United have just launched their own TV channel and would
eventually expect to be able to screen their own games live. If BSkyB
were in control of the club those games could be exclusively on a
pay-per-view basis thus rival stations would never get the chance to
sell United games as part of their TV packages which would put them at
a disadvantage and sooner or later their viewing figures would be so
poor by comparison that they would surely be forced out of business.
The BSkyB monopoly over Manchester United games would mean less
overall choice for the paying customer, in fact to view any game
involving United whether it be against Wimbledon, Leicester or any
other Premiership club, the viewer may even be expected to subscribe
to the whole package and take the entire season of United games in
order to see them play their own team live.
Should we really even be seriously considering one person having
THAT much influence on the "peoples game" and especially one
of Rupert Murdoch's character?
In Zurich recently at a meeting to discuss "fundamental issues
facing the game", Michel Platini stated, "It is essential
that football remains in the hands of football people to ensure the
game's long-term viability."
So are we to involve ourselves in a scenario of personal agendas
and allow the sale of a great football club to a monopolistic media
magnate or are we going to resist his advances in order to save our
game and keep UNITED for UNITED?
Yours sincerely,
Paul
