SBJ/September 14 - 20, 1998/No Topic Name
Soccer worth watching
Published September 14, 1998
The shock waves from Rupert Murdoch's agreement to buy Manchester United for $1 billion could be felt clear across the Atlantic, as the scramble among media companies to control global sports programming reached a new level.
Global media conglomerates are locked in an intense war to capture sports programming and in turn to buy the teams and leagues they broadcast.
With the latest salvo, Murdoch's News Corp. appears to have fired a major international blow, since rights to Manchester United, England's best-known soccer team, are sure to be valuable throughout Europe and South America.
"You have the Time Warners and the [Walt] Disneys of the world who are all engaged in this global war of the airwaves, and I would think you will see more examples of these global titans coming after more sports franchises," said Dean Bonham, president of the Bonham Group Inc. sports and entertainment marketing firm.
Even industry veterans were shocked by Murdoch's gambit to pay so much for control of one of England's most cherished soccer teams. But as with Murdoch's pricey purchase of the Los Angeles Dodgers earlier this year, the Australian media mogul appears intent on controlling key sports content to keep a lid on programming costs.
"For Murdoch, sports is a code word for TV programming," said Bishop Cheen, an entertainment analyst with First Union Capital Markets.
In the United States, News Corp.'s next push could be into the National Football League, some analysts contend. Murdoch already owns the Dodgers and has options to buy 10 percent of the Los Angeles Lakers and 40 percent of the Los Angeles Kings. His Fox Sports controls programming rights to 24 NBA teams, 23 MLB teams and 19 NHL teams and reaches 55 million households.
"The obvious thing for them is to buy a football team and move it to L.A.," said David Kelly, an analyst with BT Alex. Brown in Sydney, Australia. While NFL rules prohibit corporate ownership, Murdoch could own the team himself, Kelly said.
A Murdoch move into the NFL would almost surely draw a protest from team owners and fans, but that may only pale with the uproar Murdoch has already sparked in England with the Manchester United agreement.
Murdoch, through his British Sky Broadcasting Group PLC, already controls programming rights to the Premier League, which Manchester United plays in. But those rights expire in a few years, so owning the No. 1 team would give him huge sway in setting future terms.
In England, there is no local programming, and broadcast revenues are pooled among a league's teams. But collective bargaining is breaking down, analysts say.
As a result, "the dominant brands like Manchester United will be advantaged over the less dominant brands" in the future, said Matthew Horseman, an analyst with Henderson Crosthwaite in London.
Murdoch's deal also means that the value of leading sports teams most likely just shot up, further evidenced by the
$530 million paid for the Cleveland Browns franchise last week.
Could other cherished U.S. teams, from the Dallas Cowboys to the New York Yankees, be the next to fall under the media steamroller?
"If Manchester United could go for a billion dollars, then all bets are off for what the Yankees will go for," Bonham said.
Street & Smith's SportsBusiness Journal staff writer Liz Mullen contributed to this report.