GRANADA HAS bought a 9.9 per cent stake in Liverpool Football Club for pounds 22m, in a deal designed to make the media company the club's agent in negotiations over television rights. It also paves the way for Liverpool to have its own television channel.
The deal, which values Liverpool at pounds 220m, makes Granada the first British television company to take a stake in a football team. BSkyB's attempted pounds 600m acquisition of Manchester United was halted by the Monopolies and Mergers Commission (MMC) in April.
Granada could find it difficult to sit on both sides of the negotiating table when the Premier League television rights come up at the end of the 2001 football season. Industry experts believe the competition authorities may prevent the group representing Liverpool if it is also part of a bid to buy the rights from ITV or ONdigital, in which it also has a stake. It was this "buyer and seller" role that prompted the MMC to block the BSkyB-Manchester United deal.
However, Manchester-based Granada already owns 30 per cent of the satellite channel Manchester United Television and is likely to create a similar fans' channel of archive material and background reports for Liverpool. The stake will become especially valuable if a restrictive practices court ruling later this year forces the Premiership to stop selling television rights for the league as a whole. Granada's stake should guarantee it the rights to Liverpool games. A channel with live games would be much more valuable than archives. Last month Barcelona made pounds 254m by selling rights to its games to Spanish cable company Via Digital for five years.
Steve Morrison, chief executive of Granada Media Group, said: "We're delighted to use our expertise to help build up Liverpool FC's commercial value and to enhance the brand for its supporters."
The deal is likely to prompt other broadcasters to link with football teams. Carlton, the London and Midlands ITV franchise holder and Granada's partner in ONdigital, is known to be discussing a deal with Arsenal. Other likely links include the investment group Enic, which is backed by Warner Brothers, increasing its stake in Glasgow Rangers, and the cable company NTL reviving its plan to buy into Newcastle United.
"It makes sense for a media and leisure company to be involved in one of the biggest leisure pursuits in the country and one of the most valuable media properties," said Matthew Horsman, media analyst at the merchant bank Henderson Crosthwaite.
Granada, which owns hotels, catering companies, and motorway service stations, is also likely to focus on exploiting merchandising and marketing for Liverpool. "In the US you see baseball stars' images on Coca-Cola machines and it is possible to envisage similar things being done with Liverpool players," Mr Horsman said.
Business Review, page 4
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies