Football could power new wave of local TV

The prospect of big clubs linking up with broadcasters has set the City thinking, write Mathew Horsman and Patrick Tooher

With Granada's confirmation yesterday that it is in talks to launch regional TV channels in the UK, the whole concept is beginning to attract the rapt attention of the City. A key driving force has been the explosion in the number of new channels available on subscription and the steady growth of cable - the distribution network best suited to local programming given its flexibility and potential for interactive communication with the viewer.

Also attractive to mainstream broadcasters such as Granada, Carlton and United News & Media is local TV's ability to generate a fresh source of advertising revenues, which in turn could help finance additional programming.

Local TV has always been big business in the US. But in the UK, television has mainly been the arena of large advertisers, with smaller companies relying on regional newspapers and, more recently, radio. Local TV's biggest attraction, particularly in sports-mad cities such as Liverpool or Manchester, is the prospect of linking with major football clubs to supplement local news, arts and entertainment with a steady diet of "jock talk", interviews and features about the football stars.

Granada's own ambitions in Manchester and Liverpool, its regional franchise base, are thought to be driven by the company's belief in the drawing power of sport. In Manchester, talks are already well advanced with Nynex CableComms, the local cable operator, and the Manchester Evening News to launch a general interest channel featuring programming about Manchester United.

United News & Media is attempting to parlay lessons it learned about sport and broadcasting during an abortive bid for Premier League football rights into its first serious investment in cable programming. Speculation centres on Southampton, a Premier League city.

The main broadcasters stress that sport is only one appeal of the local TV market. Granada, for its part, trumpets its long experience as a regional programme-maker, and the fact that it knows its region very well.

The emergence of the ITV companies on the local TV scene has been noted by the two pioneering media companies, Daily Mail & General Trust and the Mirror Group, which have long been convinced of the advantages of local television.

The Mail group launched Channel One in London as a cable-exclusive channel, added a similar service in Bristol and has plans to roll the concept out across the country, perhaps next in Liverpool.

Mirror Group, which owns 46 per cent of the Independent, has launched Live TV, a national network intended to supply backbone programming to a series of local channels in major cities. Birmingham Live is already up and running, and Liverpool Live and Edinburgh Live are planned for the autumn.

Media analysts are already asking whether there is enough of a market to support more than one local channel in each major city. Live TV insists it will continue its aggressive roll-out, pointing to iron-clad carriage agreements with major cable operators. Insiders suggest Granada is talking up the prospect of channels in Manchester and Liverpool as a defence against Live TV's own expansion in Granada's backyard.

Behind it all, Premier League football clubs must be salivating about fresh ways to generate value from their stellar brands. In the past, football clubs have either been badly managed, under-funded, or both. According to Deloitte & Touche's annual report on football finances published this week, only a dozen Premier League teams made a pre-tax profit after paying transfer fees in the 1994/5 season.

But the arrival of mega-rich backers like Jack Walker at Blackburn and Sir John Hall at Newcastle, and the City's growing enthusiasm for football's financial prospects, has changed the funding side of the equation. And top clubs are finally waking up to the value of their brand names and their unique local franchises.

The main money has come so far from exclusive broadcasting rights, awarded to BSkyB. But sponsorship deals, cross-promotion with local television and newspapers, and branded programming on cable could all add welcome funds to the coffers of the leading clubs.

That's clearly the thinking behind this week's signing by Leeds United of Robin Launders, Manchester United's finance director. Mr Launders helped transform Manchester United from an underperforming, family business into one of the most profitable brand names in the country whose share price has trebled in the last year.

Jeremy Fenn, finance director of Caspian, the media group which now controls Leeds, clearly thinks luring Mr Launders across the Pennines makes sense. "Man United's annual turnover of pounds 60m is four times bigger than Leeds's, but you have to wonder whether the Leeds' brand name is really only worth a quarter of Man United's."