United, whose 1997 revenue was more than double that of any other English team, fits Murdoch's strategy of buying big-name sports teams for their broadcast rights. Sports broadcasting attracts viewers, advertising and subscriptions for pay-TV services. BSkyB has dominated UK pay-TV, though it faces more competition from cable companies and traditional free broadcasters as they introduce digital television services and give viewers more channels.
BSkyB's offer looks "like pretty good value," said Paul Richards, an analyst at Panmure Gordon. "Strategically, it's a brilliant move for BSkyB."
BSkyB's current exclusive contract to broadcast Premier League games, a key to the company's success, is in jeopardy. The OFT is preparing to take the company and the League to the Restrictive Trade Practices Court in January. It argues that the League's collective negotiating undermines the rights of the individual teams.
If the OFT wins that case, teams would negotiate their own TV contracts, and United's games would be among the most sought after. The potential formation of a European "super league" gives BSkyB another reason to try to capture the rights to United. "To own key sports teams is very important because it means owning the key critical content," said Nick Bertolotti at JP Morgan Securities.
The Premier League is also considering whether to make televised football available on a pay-per-view basis. It is weighing whether to establish its own channels or sell PPV rights to a broadcaster like BSkyB. Owning United would give BSkyB leverage.