ANALYSIS:The Irish and global interests may still prove attractive despite the parent company's woes
AT 6PM yesterday, Setanta Sports’ British channels stopped broadcasting, ending weeks of intense speculation about the broadcaster’s future.
More than 200 staff were made redundant with immediate effect and about €500 million in investment by shareholders and lenders effectively went up in smoke. It also ended the dream of Irish founders Leonard Ryan and Michael O’Rourke, whose aim was to build Setanta into a serious pay TV rival in the UK to Rupert Murdoch’s BSkyB.
Setanta was rumoured to have received a £1 billion (€1.2 billion) offer for the company in late 2007. Heady days.
The economic backdrop has changed radically in the intervening period and events took a decisive turn in the past fortnight.
A £20 million rescue involving wealthy industrialist Len Blavatnik hit a snag. This prompted the Premier League in England to pull the plug on Setanta’s prized football rights after several missed payments.
The Scottish Premier League (SPL), a key partner for Setanta, yesterday followed suit. The SPL was Setanta’s first big contract scoop in 2004 and one-third of its 1.2 million subscribers live in Scotland.
Losing this deal was a significant and symbolic blow. There was only going to be one result after the loss of that point.
Attention now turns to see if anybody will rescue the Irish and international businesses.
The international arm is loss-making but sources say Ryan and O’Rourke will probably try and buy the company. The pair are believed to have had a bid of about €20 million for this division accepted by the board of the parent group around the turn of the year but they ran into problems with financing.
The Irish business was ticking over nicely, at least until its parent hit a large speed bump recently.
It was projected to achieve revenues in 2009 of about €50 million and a profit of about€500,000.
Those projections will have to be revisited in light of the loss of various rights in the UK.
Setanta has 170,000 premium digital subscribers on the island of Ireland. These were customers of its portfolio of about a dozen channels, which included broadcasting the club TV stations of Celtic, Rangers, Arsenal and Liverpool.
Setanta Sports Ireland is also carried by cable TV providers NTL and Chorus as part of their basic packs of channels, giving it access to more than 500,000 cable homes in the republic.
That access to Irish households made it attractive to advertisers but the loss of English and Scottish top-flight soccer dilutes its appeal somewhat.
Setanta is believed to earn €5-€6 million a year from NTL and Chorus for this privilege. That deal is due to be renewed shortly.
Given that he already owns 20 per cent of the Irish business, music promoter Denis Desmond seems the most likely person to rescue Setanta’s Irish interest.
It remains to be seen if Ryan and O’Rourke will make a run of their own, possibly with former Setanta executive Mark O’Meara, for company.
Liberty Global, the Colorado-based company that owns NTL and Chorus, is also interested.
They will have to decide if the damage to the Setanta brand can be repaired and if a sustainable business plan can be formulated. Meeting both those goals would be some result.
