Branson and Murdoch lock horns as NTL bids for soccer rights

NTL, the cable TV group where Sir Richard Branson is the largest shareholder, has aggressively bid against Rupert Murdoch's BSkyB in the £2bn battle for the rights to screen Premiership football.

If successful, NTL would launch a new service, branded Virgin Sports, which may be available only for its customers. Channel 4, the free-to-air broadcaster, has also put in a bid.

The NTL move means that Sky's stranglehold over football is now seriously under threat. Sky has to make its channels available to cable companies under the broadcasting regulations but cable companies are under no obligation to reciprocate.

Offers for the next three-year deal to screen the game had to be lodged with the Premier League by 2pm yesterday. Six different packages, each with 23 matches a year, are on offer, which will cover the three seasons starting from 2007.

Sky has held a monopoly over broadcasting live matches since 1992. Retention of these rights is considered key to the satellite company's future.

Although under the new rules adopted for the auction, no single operator is allowed to hold all the packages, the City has assumed that Sky would retain five packages - reckoned to be good enough to keep the football fans among its customers.

In recent days, there had been indications that NTL - the only rival that could seriously challenge Sky's dominance - had cooled on the Premiership rights. But in the event, the cable group has bid. Analysts believe it would have done so only if it was going for at least three packages. Sky is expected to bid for five or all six (it would hand back one package if it won everything).

Given the ferocious competition that has emerged for the rights, the auction is expected to go to several rounds. And it means that Sky might have to pay more than the £1bn - or £2.5m per game - that secured the rights last time they were up for grabs, in 2003 - when competition was weak and Sky swiftly emerged the winner.

A recent research report from ABN Amro predicted that under a worst case scenario, where Sky would retain one or no packages, the company's profits in 2008 would drop by up to 47 per cent.

Aside from Sky and NTL, the other known bidder for multiple packages is Setanta, the Irish pay-TV group. Although Setanta is ambitious and has bid for at least two packages, it is unlikely to deploy financial firepower against Sky that is as fierce as that available to NTL.

In a surprise move, Channel 4 has made an offer for the rights, although it is likely to be for just one package. As a free-to-air operator, reliant on advertising revenues and with limited time available to show games, it is not viable for it to tender for several bundles of games.