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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