WEALTHY AMERICAN industrialist Len Blavatnik has thrown Irish broadcaster Setanta Sports a financial lifeline by offering to invest £20 million (€23.5 million) for a 51 per cent stake in the pay television company.
This investment forms part of an overall £50 million proposed injection of new funds into the business by Mr Blavatnik and other shareholders.
The investment proposal was agreed in principle by Setanta’s board of directors at a meeting in London yesterday.
Setanta’s board also decided yesterday to recommence taking new subscriptions from customers, having suspended the service earlier this week.
Mr Blavatnik, who emigrated to the United States from Russia in 1978 and has an estimated wealth of $11 billion (€7.8 billion), is already a small shareholder in Setanta. His investment would be made through Access Industries, a New York-based holding company that he controls.
In a statement released yesterday, Access said: “Access Industries can confirm that . . . it submitted a proposal to the board of Setanta to acquire a majority interest in Setanta, refinancing the company.
“The Access proposal is subject to a number of pre-conditions being met. Access believes that this proposal would secure the future of the broadcaster for customers, football and employees.”
Mr Blavatnik’s proposal to back Setanta followed 36 hours of intensive negotiations with the broadcaster’s Irish founders Michael O’Rourke and Leonard Ryan and former executive Mark O’Meara, who acts as a consultant to the company. The agreement gave Setanta’s board sufficient comfort about the company’s financial viability to make a £10 million payment yesterday to the Premier League in England.
The London-based sports body this week agreed to a new schedule of payments for a £35 million fee due as the latest instalment in its live rights agreement with Setanta.
It is understood that Setanta is required to pay another £10 million next Friday with the balance due in mid-July. A missed payment of £3 million to the Scottish Premier League is also likely to be paid shortly.
The investment by Mr Blavatnik is subject to due diligence, which is due to be completed by Friday.
According to one source, Mr Blavatnik is “seriously ambitious” for Setanta’s future. It is understood that the cash injection would allow Dublin-based Setanta to reach break-even, probably within in two to three years. At one point this week, Setanta appeared to be heading into administration, with the accounting firm Deloitte on standby to fulfil that role.
Setanta employs about 450 staff, including 200 in Ireland. The company also has operations in the US, Canada and Australia.
The deal will involve other shareholders investing additional cash into the business, although all of them are likely to be diluted by Mr Blavatnik’s cash injection.
Setanta’s biggest backers are private equity groups Doughty Hanson and Balderton Capital, who each own more than 20 per cent of the business.
Access has investments in the United States, Europe, South America. These include a controlling stake in Top Up TV, which run a digital terrestrial television service in the UK. It also has a minority stake in Warner Music Group. In addition, Access has investments in natural resources and chemicals, telecommunications and real estate.
Setanta has rights to show 79 live Premier League matches next season. This includes 33 games on Saturday afternoons, which are shown in Ireland only.
In February, Setanta lost one of its two rights packages to Sky, giving it 23 live games a season from August 2010.
