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Thursday, September 10, 1998

Murdoch Soccer Deal Sets Up Bigger Play
Goals for Media Empire Motivate $1-Billion Purchase of Famed Team
MARJORIE MILLER, Times Staff Writer

LONDON--There is one reason media mogul Rupert Murdoch would spend $1 billion and change to buy Britain's most revered soccer team--more than three times what he paid for the Los Angeles Dodgers--and it is not just to tweak the noses of Manchester United fans.
     Even more than potential profits, owning one of the leading teams in the world's most popular sport gives Murdoch's News Corp. enormous clout with broadcasters worldwide, while guaranteeing that its games never leave the company's flagship satellite service, British Sky Broadcasting, an international cable news and entertainment network that is the dominant pay television source in Britain.
     Murdoch also may hope to make money on the deal, which was accepted by the Manchester board on Wednesday. While few professional sports teams in the U.S. throw off a lot of profits, Manchester United is a publicly traded company and a highflier on the stock exchange here, with a healthy bottom line due to the global appeal of soccer and the team's hefty take from selling television rights.
     Owning the team could also assist Murdoch's ambitious plan to form a new European soccer league and give him an inside track on broadcast rights to those matches to feed his worldwide television interests. That empire includes BSkyB, Japan's JSkyB, Asia's StarTV and the Fox broadcast network in the U.S., where News Corp. also owns a constellation of regional sports channels.
     BSkyB, 40% of which is owned by News Corp., has agreed to buy the team, subject to shareholder and government approval, for about $1.06 billion. The price tag--the most ever paid for a sports club--is considerably greater than the $977 million leaked to the British press earlier in the week.
     Manchester United fans are furious over what they call a "sell-out," fearing that Murdoch will take the team's games off free television to drive pay television sales. In Britain, Murdoch is largely distrusted as an Australian-born billionaire who seems to eat up national institutions.
     In addition to owning BSkyB, Murdoch already has two important daily newspapers here, the respected Times of London and the Sun tabloid. He also enjoys a friendly relationship with Labor Prime Minister Tony Blair, while his daughter is buddies with Trade and Industry Minister Peter Mandelson.
     Soccer fans feel this landmark deal has everything to do with worldwide television interests and very little to do with the game they hold dear or the red-and-white team they love. Manchester United is to soccer what the Yankees are to baseball, a national icon known around the globe.
     "We're going to fight Murdoch," said Andy Walsh, chairman of the Independent Manchester United Supporters. "He's not going to come in and just take our club. . . . He's not got the interests of Manchester United at heart. He's got the interests of Rupert Murdoch at heart."

     Love of Game or Field of Green?

     Murdoch's Sky TV already owns the rights to most live broadcasts of soccer matches in England's Premier League. His purchase of Manchester United has some members of Parliament claiming that he is forming a sports monopoly and they are calling for intense government scrutiny of the deal.
     Murdoch has long promised to use sports as a "battering ram" to capture the international television market and he knows from experience that what sells cable subscriptions is sports broadcasting. His Sky network subscriptions more than tripled after he bought the rights to Britain's Premier League games.
     And Murdoch's aggressive bid for rights to the National Football League in 1994 validated Fox as the fourth U.S. broadcast network.
     But fans of the game that Europeans call football are feeling battered.
     Former Manchester United manager Tommy Docherty said, "I doubt very much if he even knows where [Manchester stadium] Old Trafford is. . . . Not being a football man, he will not understand the true feelings of football people."
     Indeed, Murdoch had never been to a baseball game before buying the Dodgers earlier this year for an unprecedented $311 million. And his immediate replacement of longtime team managers and trade of star catcher Mike Piazza irked fans, who saw the moves as heavy-handed.
     In Britain, Murdoch's Sun tabloid dismissed the objections as "hysteria" whipped up by naysayers.
     "Anyone would think BSkyB wanted to close Old Trafford down, not pump millions into it," the paper said. "Just look what BSkyB has done for football. In six years, it has invested almost 700 million pounds [$1.2 billion] that has transformed the national game. Foreign superstars queue up to play here while home-grown stars no longer head abroad. BSkyB cash has helped rebuild stadiums, providing 21st century facilities for fans. Most important, Sky channels have set award-winning standards for coverage of sport."
     The sale is subject to government approval, but they suggest that the government will hesitate to block the huge Murdoch deal for fear of retaliation from the politically powerful Times and Sun.
     "This deal is riddled with conflicts of interest," the Guardian wrote this week.
     The sale has caught the sports world by surprise, although it should have been predictable.
     Murdoch's Fox Television Network bought the Dodgers last year and owns TV rights to 22 of the top 33 baseball clubs. It also broadcasts National Football League and National Hockey League games and owns interests in the Los Angeles Lakers and New York Knicks basketball teams and New York Rangers ice hockey club.
     In Europe, Italian television tycoon Silvio Berlusconi owns the A.C. Milan soccer team. But while Berlusconi is a TV magnate with a team, he is seen as a genuine sports fan with his own ballclub, much like CNN founder Ted Turner with his Atlanta Braves baseball team. Murdoch's purchase, on the other hand, is seen as an aggressive corporate move into the world of soccer. It is confirmation that soccer teams, once family-owned enterprises and a source of community identity, have become mega-businesses beyond any community's control.
     Murdoch stands to gain from his investment in several ways.
     Both he and Berlusconi are promoting the creation of their own European Super League of soccer to take power and television revenue away from the current umbrella group, the United European Football Assn. They want to own the television rights to the competitions between Europe's best teams--and sell the broadcasts via pay-per-view--without sharing the profits.
     Critics say this would mean fans will have to pay for the Wednesday-night European games they now receive for free on commercial television throughout the Continent.
     In Britain, Sky network, with multiple sports stations available via satellite and cable, already has a four-year, $1.1-billion contract to televise Premier League games. To receive BSkyB cable, and Britain's best soccer matches on broadcast, sports fans must pay about $62 a month.
     Murdoch hopes to renew the contract when it expires in 2001. But in January, a British court will decide whether England's clubs can negotiate individual deals and sell coverage of games directly to fans via digital television, without sharing the proceeds with television companies.

     Sitting 'on Both Sides of the Table'

     With Manchester United in his pocket, Murdoch can win either way. If the court allows another league-wide contract, Murdoch goes to the negotiating table as both the owner of a major team and the TV network seeking broadcast rights.
     "What Murdoch is trying to do is sit on both sides of the table at once," said Joe Ashton, a Labor member of Parliament and chairman of the House of Commons' cross-party group on soccer. "That can't be fair trading, and it can't be in the public interest."
     Independent analysts note, however, that Manchester United is but one of 20 teams in the Premier League and Murdoch's ownership is not likely to be considered a corner on the market.
     If the Restrictive Practices Court decides that soccer teams may sell broadcast rights directly to viewers, Murdoch also wins as the owner of the country's richest team. Manchester United already has its own digital channel, launched last month to broadcast team news, reports and archival footage. Sky also is about to launch its own digital TV service.
     Finally, Manchester United's international popularity is a merchandising bonanza for Murdoch. Manchester mugs, T-shirts and tea towels are the most sought after of those with team logos. Manchester United even has its own magazine, which helps to sell its name and goods around the world. Now, the team will be advertised around the world on Sky television.
     BSkyB responded to public fears and criticism over the deal with an open letter to Manchester United fans on the official electronic announcement system of the London Stock Exchange.
     "We want to reassure you about one thing above all: BSkyB [is] going to let Manchester United be Manchester United. . . . BSkyB appreciates that this is a club with a phenomenal heritage and the most passionate fans in the world. It is not just another business, it is part of the cultural fabric of Manchester and the nation," the letter said.
     The response of soccer fans gathering for a Manchester United home game Wednesday night was less than enthusiastic. They unfolded huge red-and-white banners with the words "Sold Out."

Times staff writer Sallie Hofmeister in Los Angeles contributed to this report.

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