Sports broadcaster Setanta is close to collapse. Research group Enders Analysis estimates that Setanta’s annual losses in its UK business amount to about £100m. Accountancy firm Deloitte is on standby to put the company into administration. Setanta has 1.2 million customers, well short of the 1.9m it needs to break even. The broadcaster has until Monday to pay the Scottish Premier League £3m as part of its £31m a year deal. The Premiership is awaiting a £35m payment on June 15th.
Sports broadcaster Setanta is close to collapse. Research group Enders Analysis estimates that Setanta’s annual losses in its UK business amount to about £100m. Accountancy firm Deloitte is on standby to put the company into administration. Setanta has 1.2 million customers, well short of the 1.9m it needs to break even. The broadcaster has until Monday to pay the Scottish Premier League £3m as part of its £31m a year deal. The Premiership is awaiting a £35m payment on June 15th. Disney company ESPN is understood to be interested in acquiring its rights, but would pay less for them. If Setanta did go into administration it would be a big blow to the Scottish Premier League which held an emergency meeting to discuss the situation last week. It has already decided to dip into its own reserves to make payments that are due to clubs. The situation is also worrying for non-league clubs in the Blue Square Premiership. Each of them receives up to £85,000 a year from Setanta, which is a significant sum for a non-league club.
UPDATE 1: Premiership Take Tough Line on Setanta – 09/06/2009
The Premiership are taking a tough line on ailing sports broadcaster Setanta. A Premier League insider told the Financial Times, ‘If people can’t run their businesses properly and enter into relationships they can’t fulfil, that’s not our fault.’ Others think that the new management that has been in place for six weeks should be given time to come up with a solution, although one does not seem to be readily available. It is arguable that the aggressive bidding policy of Sky placed Setanta in its current position in the first place. The price of rights for the Premiership have risen because of BSkyB’s interest in maintaining its audience appeal. However, if Setanta goes under, it would add weight to the arguments of those at Ofcom who argue that BSkyB has too much market power and needs to be restricted. Within a fortnight, Ofcom will rule on whether it should force BSkyB to sell on its rights to its competitors and, if so, at what price. In a worst case scenario for BSkyB, the sudden collapse of Setanta could trigger a stronger reaction from Ofcom. It could add a study of the sale of Premiership rights to its pay-TV review.
UPDATE 2: Setanta Tries To Sell Stake – 10/06/2009
Setanta, the sports broadcaster on the verge of administration, has tried to sell an equity stake to companies including BT and ESPN, Disney’s sports business. Faced with the need to raise £100m to stay afloat, Setanta was seeking offers in a range of £30m to £50m for an equity stake of an unknown size. It is thought unlikely that BT would be interested. ESPN is a likelier prospect, but has declined to comment. In April Setanta held talks with private equity firms, including Carlyle, in an unsuccessful attempt to raise up to £100m. Setanta appears to have closed down its online and telephone subscription sales lines. Crunch time could well come when Setanta faces a £30m payment to the Premiership next week. If Setanta does go into administration, its investors which include global investment bank Goldman Sachs may table separate offers for the company. Pressure is mounting on Ofcom to conduct an inquiry into Sky’s dominance of the football rights market. The regulator said last September that it would conduct such a review ‘if there is a material change in circumstances, such as a major shift in the competitive landscape’. It is being argued that the collapse of Setanta would represent such a material change.