Market Insight

BSkyB sells its stake in MUTV

January 24, 2013

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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BSkyB has sold its one-third minority stake in the MUTV channel to its partner, football club Manchester United. Financial terms were not disclosed, but local press reports valued the deal at £5m. The club had previously purchased ITV’s 33.3 per cent share in 2007 for approximately £3m. The acquisition is part of Manchester United’s long-term plan to expand its media distribution capabilities. BSkyB sold its stake in Chelsea TV last year and now has no equity stake in TV channels where a football club is the majority owner.

MUTV, which made revenues of £8.8m in the financial year to 30 June 2012, began broadcasting in 1998 as a joint venture between Manchester United, Granada and BSkyB. BSkyB's bid to take control of the club in 1999 was blocked by competition regulators. It includes interviews, documentaries and re-runs of the first team’s matches but no live Premier League matches. It is offered worldwide through subscriptions and branded blocks and in the UK and Ireland as an a-la-carte service. In addition to its television channel, an on-line pay service is also offered allowing viewers to watch interviews, highlights and other selected content.

Manchester United is ranked as the third biggest football club in Europe by revenue by accountants Deloitte (the top two being FC Barcelona and Real Madrid). MUTV is distributed in 57 countries worldwide and has around 100,000 subscribers in the UK, according to Screen Digest's TV Channel Intelligence service. In a 20-F filed in the US last year, the club reported revenues from broadcasting of £104m in the year to 30 June 2012 - mainly from the Premier League and the Champions League. Significantly, the club also identified its lack of full control of MUTV as a risk factor. The report also states the club's ambition to develop its MUTV on-line platform to generate more revenues from mobile and video-on-demand: 'We intend to distribute this content on a subscription and pay-per-view basis. Depending on the market, we may offer video on demand services via our media partners as part of a comprehensive suite of media rights as well as on a direct-to-consumer basis from us.'

This week also saw the award of UK online and mobile clip rights for the Premier League to BSkyB's major shareholder News International. In a three-year deal starting in August, the group's UK newspaper titles will have the rights to show clips from all 380 matches a season, including near-live clips on mobile devices.

Last year BSkyB disposed of its 35 per cent holding in Chelsea Digital Media for a profit of £7m. Both deals could be seen as an effort to offset part of the increased cost of rights to 116 live Premier League matches for £2.3bn as well as extended highlights for 226 league matches per season.

Manchester United is currently only listed on the New York Stock Exchange. Its price moved up to almost $17 a day after the announcement. This was a 40 per cent increase after reaching an all-time low of $12 in recent months, which could indicate that investors on the other side of the Atlantic feel positive about the deal. However, the club's current position at the top of the Premier League and the fourth round of the FA Cup in England, and the last 16 in the Champions League is certainly a much larger factor.

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