September 8, 1998

 

Murdoch Reported to Have Bid $950 Million for Britain's Richest Soccer Club

By ALAN COWELL

LONDON -- Fresh from acquisitive forays into U.S. sports, Rupert Murdoch is aiming at the richest stratum of British soccer with a reported $950 million bid for the fabled Manchester United club that would tighten his grip on televised sports in this country.

B Sky B PLC, Murdoch's British satellite broadcasting unit, confirmed in a statement Monday that it was "in discussions which may or may not lead to an offer being made for Manchester United." The team is the wealthiest British soccer club, with profits last year approaching $45 million from merchandising, gate receipts and broadcast fees.

The maneuver seemed to reflect acquisitions in the United States, where Fox TV, controlled by Murdoch's News Corp., purchased the Los Angeles Dodgers in March and has a stake in the New York Knicks, in addition to options on stakes in the Los Angeles Lakers and the Los Angeles Kings, an ice hockey team.

News of the bid brought angry roars from some of Manchester United's estimated 3 million fans and raised a possibility of government regulators scrutinizing the deal.

None of that worried investors: Manchester United stock, listed since 1991, leaped more than one-third in early trading on the London Stock Exchange, adding some $240 million in value. At one point, the gains put the share price just below B Sky B's reported offer of 225 pence a share; the shares fell back to around 207 pence, a 30 percent gain on the day. Other leading soccer teams listed on the stock exchange notched up gains of around 12 percent in anticipation of interest from other entertainment companies.

B Sky B's negotiation also set loose a likely bidding war with Enic PLC, the British leisure group that already has a stake in several other European soccer clubs and which has a joint venture with Time Warner in restaurants and retail trade. Enic executives withheld comment on widespread news reports that the company was planning a rival bid, hoping to benefit from the unpopularity of Murdoch's move among supporters of the team.

Murdoch once called televised sports the "battering ram" of pay TV. The Evening Standard newspaper said, "In Manchester United, he could not have chosen a bigger weapon." But the bid also raised hackles: Murdoch's B Sky B already has a monopoly in broadcasting games played by British soccer's mass-audience Premier League, in which Manchester United is a star attraction among the 20 teams.

Ownership of the club could give him an edge in renegotiating exclusive broadcast rights when the current four-year Premier League arrangement, valued at some $1.1 billion, expires in 2001. "He wants to be around the negotiating table with the Premier League clubs," said Vinay Bedi, a soccer industry analyst with the brokerage firm Wise Speake in Newcastle in northeastern England. It would also provide a hedge if British regulators end the rules permitting exclusive broadcasting rights to the entire Premier League.

B Sky B has a stake in Manchester United's own television station, MUTV, putting it in a strong position if British sports television goes the way of Spain and Italy, permitting individual clubs to control broadcast rights to their games.

Not only that, Murdoch's control of Fox TV in the United States and his Star TV in Asia offer the possibility of turning Manchester United into a global attraction for paying viewers and advertisers alike, analysts said.

"It shouldn't be seen as a stand-alone event but as part of the broad strategy, which is to become the dominant global force in the media and entertainment sphere," Eric Betts, an analyst with Nomura Australia, told Reuters.

Murdoch's bid to acquire Manchester United has inspired worries that his control of British sports is becoming all but unassailable. Radio talk shows in the north of England, where Manchester United has its core following, were deluged with hostile calls. And Peter Mandelson, the trade and industry secretary, said regulators would look at a bid by Murdoch for Manchester United "very searchingly indeed."

Murdoch has been a prime force behind the transformation of British televised sports into a lucrative industry. Apart from B Sky B's control of the Premier League in soccer, the venture also has a lock on many major rugby and cricket tournaments.

But Murdoch has trailed other European media concerns in moving into the ownership of the clubs themselves. Enic, the leisure company thought to be preparing a rival bid, owns soccer teams in Italy, Greece and the Czech Republic and a one-quarter stake in the Glasgow Rangers team in Scotland.

One question that lingers unanswered is why Manchester United is offering itself for sale. Both the advent of pay-per-view television sports and the talk of a possible European super league were major attractions for B Sky B, Bedi, the soccer analyst, said. "But," he added, "one wonders why Manchester United would be interested in selling when these pots of gold are waiting for them."