One man's obsession to beat the world of sport into submission

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The Independent Online
RUPERT MURDOCH'S pounds 575m bid for Manchester United, the world's most valuable sporting name, is confirmation that the tycoon's business plan has moved from owning the television rights to sport to controlling sport itself.

Sports rights have made his business what it is. In 1992 BSkyB, in which he has a 40 per cent stake, made a loss of pounds 47m, then stunned the football and broadcasting worlds by paying pounds 192m for five years of Premier League television rights. The previous contract had cost ITV just pounds 44m.

Mr Murdoch's gamble worked and in 1993 subscriptions to his services rose from 1.8m homes to 2.5m and profits rose to pounds 61m. The next year subscriptions rose to 3.9m homes and profits were up to pounds 170m. Sport helped BSkyB's turnover to rise by 333 per cent to over pounds 1bn in five years.

In 1996, to secure his grip on the Premier League, BSkyB paid a mammoth pounds 670m for a new four-year contract.

By paying so much for football Mr Murdoch is able to move games to nights of the week that suit his TV station.

Other sports have followed the same pattern. When he bought the television rights to Rugby League in 1995 he horrified traditionalists by creating a Super League that required teams to merge, change names and play in the summer, all to fit his scheduling needs.

In the US Mr Murdoch's Fox network has pursued the same strategy. Since it bought the rights to the National Football League in 1993 for $1.5bn (pounds 940m) it has moved from being the fourth-choice channel for valuable 18 to 49-year-olds to second. Fox now has the rights to the National Hockey League, Major League Baseball and the National Basketball Association. In June Fox renewed its contract with the NFL for $4bn (pounds 2.5bn).

Now having unlocked the hidden value in televised sports Mr Murdoch has realised that it is the teams who will reap the benefit of digital technology, which will allow them to create their own channels and sell games directly to fans. He has decided to join them.

In January the Restrictive Practices Court will sit to decide whether the current television contract between the Premier League and BSkyB is anti-competitive. The Office of Fair Trading contends that the Premier League is acting as a cartel by selling football's television rights as a group, rather than letting individual teams sell rights to their own games.

If the teams get the right to sell their own games they are likely to set up their own television channels to sell the games on digital frequencies on a pay-per-view basis. By creating "electronic season ticket holders" the teams could cut out the middleman and make more money themselves.

The first team to set up its own channel was Manchester United, which launched a channel with BSkyB and Granada Television last month. The channel was just to broadcast team news, behind-the-scenes reports and archive footage. Unless the Restrictive Practices Court breaks up the current Premiership deal it will not be able to show live Manchester United games.

But if Manchester United ends up in the hands of BSkyB the satellite broadcaster is covered whatever way the court rules. If the OFT's case is thrown out it keeps its Premiership contract until 2000. If the Premiership's deal is ruled anti-competitive, Mr Murdoch will have the rights to the most valuable team in Britain. Either way after 2000 all the teams are likely to go their own way.

Controlling Manchester United will also let Mr Murdoch steer British football into a future that suits him, particularly his investment in 200 digital channels. It would also help if any outside media group tries to outbid him for Premiership television rights if the contract survives to be renewed at the start of the new millennium.

The model for what he is doing already exists. The drive for a European super-league is being led by Silvio Berlusconi, the Italian television mogul and owner of AC Milan. Critics of the super-league plan believe it was prompted by Milan failing to qualify for any lucrative European tournaments this year. Mr Berlusconi wants a new type of tournament to ensure big teams always have an opportunity to play in big games, which will attract viewers. A Murdoch-owned Manchester United is likely to be even more keen on such a proposal.

The other model is his American businesses. The purchase of the Los Angeles Dodgers baseball team early in 1998 gave him an emotive name - of the heirs of the never-to-be-forgotten Brooklyn Dodgers - and a franchise that sits astride the richest media market in the US. But he paid only $350m (pounds 210m), against the pounds 575m he is said to be offering for Manchester United.

Nor do the Dodgers dominate baseball; other media groups have long since owned clubs, and sometimes more successful ones. Ted Turner of CNN owns the Atlanta Braves, the dominant team of the 1990s. Disney/ABC recently bought the Anaheim Angels and the Chicago Cubs are part of the Chicago Tribune group.

The story is the same in basketball. Mr Murdoch owns the LA Lakers and the New York Knicks, in the largest and second largest US media markets. But neither has recently been a major force in the game, both being eclipsed by Michael Jordan's Chicago Bulls.

All, however, are part of Mr Mr Murdoch's declared strategy of using sport as a "battering ram" to attract a bigger market for News Corporation's global TV operations.

Chase Carey, chairman of Fox Television, gave an explanation for the purchase of the Dodgers that will sound familiar to Manchester fans: "We were not interested in just any sports franchise. The Dodgers are in many ways one of the most unique and valuable franchises in all sports. That comes from their location, their history and their following."

Opposition to the deal is likely to come from other teams, which will resent having Mr Murdoch as both a buyer and a seller of television rights. However, in the US only two teams voted against Mr Murdoch's purchase of the Dodgers and in the UK other Premiership teams have no veto on the ownership of their rivals.

Fans concerned about the commercial drift of the game have cause for worry. BSkyB's dominance of sports television has let it systematically increase subscription charges.

Premiership chairmen this year rejected BSkyB's proposals for making some games pay per view next season, but as both club owner and owner of broadcast rights, Mr Murdoch could push the league harder to exploit the new technology.

Further opposition may be regulatory. Tony Banks, sports minister, hinted at a Monopolies Commission referral when he said yesterday: "I can't see this just sailing straight through."

The Government will be stuck with its usual dilemma over Mr Murdoch. Popular opinion and backbench left-wingers will oppose the deal, but the Government will not wish to have Mr Murdoch's newspapers turn against it if it refers the acquisition to the competition authorities.

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