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Manchester United sets up its own TV channel

Manchester United became the first football club to set up its own pay-TV channel, as it confirmed its long-awaited deal with BSkyB and Granada.

The three parties, which will have an equal share of equity in the venture, will contribute around pounds 7m between them, but BSkyB and Granada are expected to bear the brunt of the investment.

The deal will come as a blow to the BBC and the cable and satellite programmer Flextech, which had previously been ahead in the race to sign up the club. City analysts said yesterday that BSkyB had been canny in getting involved with MUTV, as it would enable the satellite broadcaster to maintain its monopoly on sports content. BSkyB already has an exclusive contract to show all Premier League games, which has another four years to run.

MUTV is to launch in a year's time, and will carry six hours of programming each day. It will initially be available on digital satellite and cable, but Steve Morrison, chief executive of Granada Media Group, said it could eventually broadcast on digital terrestrial television. Granada jointly owns British Digital Broadcasting, which won all three digital terrestrial licences earlier this year.

However, some observers expressed doubt that the channel would be a success without any live games. Justin le Patourel, media analyst at ABN Amro Hoare Govett, said: "There is no live content on these channels, and old football games just aren't interesting."

Mr le Patourel said MUTV was likely to be the first of many similar channels, with Leeds United and Newcastle United having expressed an interest in setting up television ventures.

David Chance, deputy managing director of BSkyB, said the channel would move into profit if under 10 per cent of the estimated two to four million United fans subscribed. Martin Edwards, United's chief executive, said he expected the channel to break even within three years of its launch next autumn.

Meanwhile, Mr Morrison said: "There's an unsatisfied appetite for Manchester United and all its internal and external affairs. We want to extend the club's brand beyond its fan base."

United yesterday announced a 79 per cent surge in profit before tax to pounds 27.6m for the year to the end of July. The previous year's figures had been slightly inflated by a pounds 2.2m exceptional contribution.

An increase in gate receipts helped offset rising player costs, with 1.47 million people attending the 27 matches at Old Trafford. Player costs increased by pounds 5.4m during the year.

Man Utd prepare to take on Juventus - Sport, page 31