Will Murdoch blow the whistle?

It's a row involving sport, broadcasting and Rupert Murdoch, and it has nothing to do with Manchester United. Last December the Los Angeles Dodgers, the American baseball team recently purchased by Murdoch, signed a free-agent pitcher named Kevin Brown to a seven-year $105m (pounds 65m) contract - the highest in history.

As an athlete Brown is the equal of David Beckham. In the past two years he has led the Florida Marlins and the San Diego Padres to World Series appearances. "He's the real goods," says Jeff Jones, a Donaldson, Lufkin & Jenrette analyst who follows Murdoch's Fox properties in the US.

But Brown is 33. So he will turn 40 before the final year of his contract. Fans wonder if Murdoch has done the right thing. So does Wall Street. "If Brown takes the Dodgers to the World Series, he'll bring in the cable TV viewers," says Jones. "The viewers will bring in the advertising. But if he doesn't win - no viewers, no advertising."

Jones explains Murdoch's sports/media strategy more succinctly than City analysts do. "You own a team local people care about. You invest so it's a winner. A local winner means big ad revenues on your local cable channel."

The kicker is this, Jones says: "Because you own the team, you don't have to pay more for broadcasting rights as it's fortunes improve. Thus, against a fixed base of costs, your profits rise as your sales rise."

Wall Street thinks the Government's decision to block BSkyB's bid for Man U is a non-event for Murdoch and his News Corporation media empire. "In the grand scheme of things it's just not that big a deal," says Mark McFadden, a DLJ analyst who follows pay-TV companies outside the US. "Since I thought the pounds 623m BSkyB bid for Man U was too much, I think the blocking of the deal is good news." On Wall Street on Friday BSkyB American Depositary Receipts closed up an eighth at $52.25.

If, however, Wall Street is shrugging off the Man U news as an immediate market mover, it wonders what the decision means for Murdoch's global corporate strategy - and particularly his strategy in Europe.

Act One of News Corp history runs from the Sixties to 1990. During this period Murdoch moved out of Australia into the UK. Highlights include the creation of the Sun, failure to get a foothold in UK terrestial TV, and the purchase of The Times.

Act Two runs from the low point of Murdoch's career when after paying too much for America's TV Guide while being hit with the start-up costs for Sky Television, he had to beg Citicorp to restructure News Corp's $9bn in debts.

Since 1990, however, it's been almost entirely up. News Corp whittled down its debt mountain. Shares have risen from less than two Australian dollars to more than 14. In February the company reported after-tax income of $395m on revenues of $4.1bn for the final quarter of 1998, making it the fifth-largest media conglomerate in the world.

Adding to Murdoch's print empire - magazines and books as well as newspapers - he has taken the American electronic media industry by storm. He bought Twentieth Century Fox and developed Fox Television. He has interests in the New York Knicks basketball team and the New York Rangers hockey team, as well as owning the Dodgers.

Act Three is the present. Murdoch seems genetically programmed to seek global domination. In this final push, Sky Latin America is doing well. Murdoch's relationship with the regime in Peking remains murky, but his Asian interests appear to be progressing.

It is Europe that is proving his great stumbling block.

A sweeping strategist, Murdoch is also a great opportunist and hands- on deal-maker. In the 1970s, when wrenching New York Magazine from Clay Felker, Jimmy Breslin and Tom Wolfe, he orchestrated last-minute negotiations from a men's loo outside the conference room.

Yet on the European continent his deal-making skills have faltered. He failed to woo the widow of Axel Springer at a Hollywood academy awards ceremony several years as he tried to gain a foothold in Germany. He failed to woo Leo Kirch to gain a German foothold. He failed to woo Silvio Berlusconi, the Italian media magnate and former prime minister.

Last month, almost embarrassingly, he failed to bring off a merger between BSkyB and Canal Plus, the number one European cable company, despite the fact that he offered to accept less board control in the merged group than most observers expected.

"That's what was interesting about the Canal Plus talks," says a City banker. "That he was willing to surrender so much just to get a foothold in the industry."

Continental Europe has stymied Murdoch because the aggressive Australian with American citizenship cannot fathom the continental system of joint ventures and under-publicised crossholdings. "The Europeans have been able to work this way because, unlike Anglo-Saxon companies, they have not been under pressure from shareholders," the banker says.

Murdoch may now rethink BSkyB. It has been a fixed point in the News Corp universe - the platform from which Murdoch has sought to attack Europe.

Now he may use BSkyB as a bargaining chip in dealing with his continental counterparts. "His choice is to go into the Continent passive," says DLJ's McFadden, "or to start smaller."

The question is whether Murdoch has the heart to build from scratch in Europe. If he does not, it may prove the sand in which his juggernaut finally judders to a halt. If so, those applauding the blocking of BSkyB's ambitions at Man U are right to cheer.

The Government's decision to block BSkyB's bid for Man U could be the reverse that breaks Murdoch's will to extend his dominion on to the Continent. The short-term winners in that case may be diehard Man U fans. In the longer term they are likely to be the continental Europea media moguls with whom Murdoch must now deal on weakened terms.