Fight for their rights

Setanta will be covering half as many Premier League games as a result of their new deal. Denis Hurley ponders the implications

Where now for Setanta? The Irish company’s attempt to play hardball in the recent Premier League live TV rights negotiations ended with it winning only half of what it previously had. They will be paying £159 million to show 23 live games on Saturday evenings for the three years from 2010-11, down from the 46 of the previous deal as Monday night games were lost.

It is probably incorrect to say that Setanta “won” anything, as Sky outbid it on all six 23-game packages, with only the EU’s anti-monopoly laws preventing it from taking total control of live coverage. Setanta actually saved money by offering £53m per year per package – in 2006 it won two packages at a cost of £392m.

They have also had the consolation of seeing Disney-owned ESPN fail to secure any games, though that too will be a comfort to Rupert Murdoch, with Setanta a less formidable opponent to have to deal with. While Sky may yet suffer for its huge new outlay – its shares took a tumble on the day of the announcement as it emerged that it would be paying a total of £1.62 billion – the new arrangement has worked out very well for the Premier League who will be earning more than they received in 2006, despite the economic downturn.

This is the first major setback for Setanata since establishing itself as a major broadcaster. Set up in 1990 to show Ireland’s World Cup games in London pubs, its first Premier League contract in 2006 was augmented by a deal with ITV to show the FA Cup and England internationals; the Scottish Premier League had been snapped up in 2004. With 1.5m premium subscribers, some 400,000 short of what analysts agree is its break even figure, Setanta now faces a tough time, with some of those 1.5m likely not to renew as a result of the reduced Premier League coverage. All of which will not reassure shareholders such as investment bank Goldman Sachs, and private equity firms Doughty Hanson and Balderton Capital. Those same shareholders may now be willing to listen to takeover offers, with ESPN a likely candidate, though bidding will begin at a lot less than the £1bn the company was rumoured to be worth last year.

In the immediate aftermath of the announcement of the package winners, Setanta bosses were reported to be seeking urgent meetings with the Premier League in a bid to get back its Monday games, while they have also launched an audacious bid to sub-contract some of Sky’s matches.

While that probably wouldn’t be sanctioned by the Premier League anyway, it is also highly unlikely that Sky would be open to such a proposition, leaving Setanta to contemplate drastically scaling back its other programming, with Sky in line to pick up any rights that are ceded.

Aside from football, Setanta’s offerings are what would be considered niche markets – US PGA golf (but no majors), Indian Premier League cricket and Irish League football, while Setanta Sports News is little more than an imitation of its Sky counterpart. They have had a small victory recently acquiring the rights to Guinness Premiership rugby, currently shown on Sky, from 2010-11 at a reported cost of £11m a year.

The company will hope to retain the Irish rights to show Premier League games at 3pm on Saturdays, which will be renewed this summer, while Monday night transmissions are also up for separate tender. However, with almost 600,000 Irish subscribers of their own, generating €150m (£134m) a year, Sky may endeavour to kill off the competition by securing those rights too.

From WSC 266 April 2009