British Government Blocks Murdoch’s Goal of Buying Soccer Team

In a blow to Rupert Murdoch’s sports expansion, the British government on Friday blocked a $1-billion bid by the media magnate’s British Sky Broadcasting to take over this nation’s most famous soccer team, Manchester United.

Industry and Trade Secretary Stephen Byers said his decision was based on the recommendations of the Monopolies and Mergers Commission, which conducted a six-month investigation of the proposed deal.

Byers said the commission had concluded that the deal would be bad for broadcasting and for British soccer.

“The MMC’s findings are based mainly on competition grounds, where they concluded that the merger would adversely affect competition between broadcasters,” Byers said.

“They also examined wider public interest issues, concluding that the merger would damage the quality of British football [soccer] . . . by reinforcing the trend toward growing inequalities between the larger, richer clubs and the smaller, poorer ones,” he said. “I accept these findings.”

Critics of the deal had argued that it would have allowed BSkyB--Britain’s largest pay-TV company--to sit on both sides of the table during negotiations for television rights.

Some owners of U.S. baseball teams had the same fears about having the Los Angeles Dodgers owned by the same company that owns a major broadcast network, Fox, as well as a group of regional sports services. Murdoch views sports as a powerful driving force to develop his global television interests, once comparing sports to a “battering ram” that will allow him to open pay television and cable markets.

Byers said the commission concurred that a takeover would have reduced competition for the rights to broadcast Premier League matches.

BSkyB launched its takeover bid in October, offering to pay more than $1 billion for the club.

The decision to block one of Murdoch’s big commercial deals in Britain may be one of the most politically sensitive for the government of Prime Minister Tony Blair. It had been suggested that Blair would not risk angering Murdoch, who owns the powerful daily tabloid the Sun and the conservative broad sheet the Times.

As expected, Friday’s news was greeted warmly by Manchester United fans and condemned by BSkyB executives.

“It is a tremendous victory,” said Andy Walsh, chairman of Manchester United Independent Supporters’ Assn. “This is great for us and for anyone fighting for the independence of their club.”

But Mark Booth, chief executive of BSkyB, said the decision “is a bad ruling for British football clubs, who will have to compete in Europe against clubs who are backed by successful media companies.”

Shares in Manchester United dropped nearly 15% on the London stock exchange after the announcement.

It is unclear what the decision means for the 11% share of Manchester United that BSkyB already owns and the 14% owned by the club’s chief executive, Martin Edwards, who had advocated the takeover bid.

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