Rupert Murdoch’s Manchester United? How BSkyB nearly bought the Red Devils

Rupert Murdoch, Manchester United
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I want my MUTV

Clubs had also been quick to recognise the marketing potential of setting up their own channel. If these incredibly brand-loyal consumers have already got a satellite TV, went the reasoning, clubs could have their own slice of the rapidly expanding broadcast spectrum and fill its schedule with old clips, talking heads and fandom. It might be more Pravda than Washington Post but who cares when you control the means of dissemination?

If what TV companies wanted was content, what they offered (besides cold hard cash) was broadcast know-how. As if to set a fiendishly difficult pub quiz question, the world’s first club-specific TV channel was Boro TV, launched in February 1998 by NTL’s Premium TV.

But the biggest name was MUTV, and it brought together three very big hitters in a giant joint venture: taking equal 33.3% shares were United, BSkyB and ITV. United would bring the brand, the broadcasters the brains – and the content would drive subscriptions, helping to establish digital TV in the same way Premier League footage had spent the previous half-decade pinning bin lids to the outside of everyone’s houses.

MUTV launched on Thursday, 10 September 1998, but by then the story had got much bigger. The takeover news had broken via the old-fashioned Sunday newspapers, with BSkyB quickly confirming negotiations over a £575m bid. United were expected to inform the London Stock Exchange, as PLCs are legally obliged to do, on Monday morning – but two days passed, amid a flurry of speculation and hair-tearing, until the club confirmed on Wednesday morning that it had accepted a £623.4m bid.

The offer of 240p per share (half as cash, half as BSkyB shares) was a shade more than 50% higher on Friday’s closing stock-exchange value of 159p. Perhaps helped by the feeding frenzy that followed the news breaking on Sunday, United had wrangled nearly an extra £50m on top of BSkyB’s original eyebrow-raiser, but the broadcaster didn’t blink. By the time hands were shook, they’d brought the big dog to the table.

Rupert Murdoch, whose News Corp owned 40% of BSkyB but whose hand was definitely on the tiller, had long recognised that media needed sport. Having bought ailing newspaper The Sun in 1969, the Aussie had revitalised it by revamping the football coverage, notably going big on transfer gossip – a content innovation that rings down the ages. He had also quickly identified that the Premier League rights could establish Sky, which is why he was happy to do as Alan Sugar suggested and “blow them out of the water” with the £304m bid.

In both cases, the gamble had worked. By now, United were the world’s most profitable football club, its latest annual accounts showing a surplus of £27.6m – remarkable for its sector; the BBC Business section described in a tone of wonder how the club’s “popularity has meant that it earns as much from merchandise sales and advertising as from gate receipts”. But such fiscal success was dwarfed by BSkyB’s latest figures, which showed pre-tax profits rising 22% to £314m.

Nor was this Murdoch’s first venture into wearing a club-branded cap. Naturalised as an American, he had already bought the LA Dodgers baseball club, along with the TV rights to the sport via his Fox network. He also owned slices of the LA Lakers and New York Knicks basketball teams, the latter being on the patch covered by his own mass-market tabloid the New York Post.

Having the media platforms is fine, but if you own the means of (entertainment) production, so much the better. “Broadcasters are increasingly seeking valued added content,” explained industry analyst Nick Battram. “It’s analogous with the software industry, where the value is in the software, not the hardware.

“There’s no point setting up a satellite or cable station unless you can show something that people want to watch and the biggest pull is football, especially Premiership football. This is why you have BSkyB trying to buy into Manchester United, as they recognise there is only one way these rights are going to go and that is up.”

The opposition masses

As had happened 14 years previously with Murdoch’s old press rival Maxwell, the takeover news sparked immediate and visceral opposition, largely targeted at chief executive Martin Edwards. But whereas Cap’n Bob had only been offering £10m, this was a rather more sizeable slice of cash – easily enough to buy a big wall to surround your house in Cheshire and install double glazing to drown out the protests.

The BBC reported that as the largest single shareholder, Edwards would see his 14% stake increase in value to £87m – around £30m more than if he had sold on the open market the previous Friday. Maurice Watkins, the club lawyer who had attended the Heathrow meal mainly to sign administrative papers, saw his 2% slice grow from £8m to a theoretical £12.5m.

But while many United fans derided the incumbents, many more feared the incoming administration. As fans are wont to do, they reached back into history to defend the honour of their publicly-listed club. “The success of Manchester United has been built up by the likes of Matt Busby and Alex Ferguson,” raged Andy Walsh, chairman of the Independent Manchester United Supporters Association (IMUSA). “One man does not have the right to sell that success on in such a fashion. Rupert Murdoch will rape and pillage Manchester United.”

Opposition was quickly organised, across all sorts of boundaries. IMUSA received a £10,000 donation from Queen drummer Roger Taylor. After United-supporting journalist Michael Crick railed against the bid via an Evening Standard piece and Newsnight film, he was contacted by advertising guru Richard Hytner, who owned 6,000 shares; with PR maven Richard Lander, they set up Shareholders United Against Murdoch (SUAM).

SUAM worked closely with IMUSA, which tickled Crick: “Andy [Walsh] had been a member of the [hard-left] Militant tendency, while I probably more than any other journalist had been the person who exposed Militant for what they were. Fortunately no journalist cottoned onto this strange alliance.”

Unusually, United fans even gained some sympathy from outsiders, even if some of the opposition came from rivals who feared the worst if the dominant footballing force was strengthened by Murdoch’s media muscle. As the Sunday Telegraph’s sports editor Colin Gibson said: “A lot of the other football clubs in the Premiership will be very, very concerned at this news.”

It wasn’t just the fans who were wary. FA chief exec Graham Kelly warned that, “We have to assess the implications very closely indeed.” A senior Labour backbencher fretted: “If this deal goes through, Murdoch will have a stranglehold on sport in this country.”

That concern reached the front benches. Chelsea-supporting Sports Minister Tony Banks suggested the Office of Fair Trading could order an inquiry: “This can’t be treated as if it were just a normal takeover of one publicly quoted company by another.”

This was confirmed even further up the greasy pole, where the oleaginous Secretary of State for Trade and Industry, Peter Mandelson, reached for a grab-bag of adverbs while pledging that the OFT would examine the bid “very completely and extremely searchingly”.

NEXT: The sky falls in