This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8089275.stm
The article has changed 4 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Why Setanta Sports is in trouble | Why Setanta Sports is in trouble |
| (about 2 hours later) | |
| By Bill Wilson Business reporter, BBC News Where it all began - Setanta started life in a former Irish club in Ealing | By Bill Wilson Business reporter, BBC News Where it all began - Setanta started life in a former Irish club in Ealing |
| Two decades ago sports broadcaster Setanta started life in an Irish dance hall in west London, showing the Republic of Ireland's 1990 World Cup game against Holland after the BBC and ITV declined to broadcast the game in the UK. | Two decades ago sports broadcaster Setanta started life in an Irish dance hall in west London, showing the Republic of Ireland's 1990 World Cup game against Holland after the BBC and ITV declined to broadcast the game in the UK. |
| It cost just £10 admission to watch that game in Ealing's Top Hat club and Setanta's two Irish founders, Michael O'Rourke and Leonard Ryan, managed to break even after 1,000 Irish fans turned up to watch the game. | It cost just £10 admission to watch that game in Ealing's Top Hat club and Setanta's two Irish founders, Michael O'Rourke and Leonard Ryan, managed to break even after 1,000 Irish fans turned up to watch the game. |
| Nineteen years later, Setanta was a company transformed. It had expanded gradually at first, and then grown in a spurt from 2004 onwards - which saw it acquire major sporting rights not only for football tournaments, but golf, horse racing, rugby union, cricket and boxing. | Nineteen years later, Setanta was a company transformed. It had expanded gradually at first, and then grown in a spurt from 2004 onwards - which saw it acquire major sporting rights not only for football tournaments, but golf, horse racing, rugby union, cricket and boxing. |
| Along the way it changed itself from a niche broadcaster providing Irish and Gaelic sport to an expatriate audience, complete with homely Dublin guesthouse advertisements, to a rival for Sky whenever major sports rights came up for grabs. | Along the way it changed itself from a niche broadcaster providing Irish and Gaelic sport to an expatriate audience, complete with homely Dublin guesthouse advertisements, to a rival for Sky whenever major sports rights came up for grabs. |
| Unfortunately for Setanta the financial sums involved had changed greatly too. | Unfortunately for Setanta the financial sums involved had changed greatly too. |
| 'Major breakthrough' | 'Major breakthrough' |
| Since the turn of the year, Setanta - which has 1.2 million customers rather than the 1.9 million it needs to break even - had been desperately trying to raise new capital in order to meet payments for sports rights. | Since the turn of the year, Setanta - which has 1.2 million customers rather than the 1.9 million it needs to break even - had been desperately trying to raise new capital in order to meet payments for sports rights. |
| Q&A: Setanta and you | |
| No sooner would it make one payment, for example to the Football Association, then money would be owed to other rights holders, such as the £3m owed to the Scottish Premier League, or the more than £30m to the English Premier League. | No sooner would it make one payment, for example to the Football Association, then money would be owed to other rights holders, such as the £3m owed to the Scottish Premier League, or the more than £30m to the English Premier League. |
| With the pressure of payments increasing, there are reports that the firm is on the brink of administration. | With the pressure of payments increasing, there are reports that the firm is on the brink of administration. |
| If Setanta does collapse, its broadcasting rights, such as those owned by the Premier League, will revert to the holders, who will then try to find buyers for their broadcasting packages. | If Setanta does collapse, its broadcasting rights, such as those owned by the Premier League, will revert to the holders, who will then try to find buyers for their broadcasting packages. |
| James Pickles, editor of industry journal TV Sports Markets, says: "Setanta was initially able to build a very successful niche business across the world by providing one-off coverage of Irish and Gaelic sporting events to expat audiences. | James Pickles, editor of industry journal TV Sports Markets, says: "Setanta was initially able to build a very successful niche business across the world by providing one-off coverage of Irish and Gaelic sporting events to expat audiences. |
| "Gradually they built it up to the point where it was a worldwide operation with a number of different TV channels, such as Setanta North America, offering a number of different sports, often tailored to each individual market. | "Gradually they built it up to the point where it was a worldwide operation with a number of different TV channels, such as Setanta North America, offering a number of different sports, often tailored to each individual market. |
| "A major breakthrough from expatriate broadcasting to major UK rights came when they won the Scottish Premier League football for the first time in 2004. | "A major breakthrough from expatriate broadcasting to major UK rights came when they won the Scottish Premier League football for the first time in 2004. |
| "But the big step up was in 2006 when they picked up the two English Premier League packages." | "But the big step up was in 2006 when they picked up the two English Premier League packages." |
| Golf deal | Golf deal |
| That coup gave them the right to show 46 matches annually for three seasons from 2007/08 to 2009/10. | That coup gave them the right to show 46 matches annually for three seasons from 2007/08 to 2009/10. |
| In some ways it was handed to them after the European Commission ruled that, for competition reasons, one broadcaster could not own all the six domestic Premier League rights packages. | In some ways it was handed to them after the European Commission ruled that, for competition reasons, one broadcaster could not own all the six domestic Premier League rights packages. |
| That decision brought an end to Sky's monopoly and allowed Setanta in. | That decision brought an end to Sky's monopoly and allowed Setanta in. |
| "That seemed to cool the doubts that some people had about the business, and it started gaining them a bigger audience," says Mr Pickles. | "That seemed to cool the doubts that some people had about the business, and it started gaining them a bigger audience," says Mr Pickles. |
| That was followed by the deal with PGA golf, which secured coverage - for six years from 2007 - of 40 top golf events annually in the US. | That was followed by the deal with PGA golf, which secured coverage - for six years from 2007 - of 40 top golf events annually in the US. |
| Once again Setanta broke the Sky monopoly, and grabbed the exclusive UK and Republic of Ireland rights to the premier US golf professionals competition | Once again Setanta broke the Sky monopoly, and grabbed the exclusive UK and Republic of Ireland rights to the premier US golf professionals competition |
| "That was their second big move," says Mr Pickles. "People said it was very clever as it gave Setanta lots of content, and enabled them to actually set up their golf channel. | "That was their second big move," says Mr Pickles. "People said it was very clever as it gave Setanta lots of content, and enabled them to actually set up their golf channel. |
| "At that point it all appeared to be moving forward for them. | "At that point it all appeared to be moving forward for them. |
| "However, in a way it was not long after that golf deal that their problems started." | "However, in a way it was not long after that golf deal that their problems started." |
| No buyers | No buyers |
| After securing the Premier League rights, Setanta received in excess of £400m in private equity funding. | After securing the Premier League rights, Setanta received in excess of £400m in private equity funding. |
| But the private investors wanted to see a return on their money, and soon started to look around for a profitable sale. | But the private investors wanted to see a return on their money, and soon started to look around for a profitable sale. |
| "Private equity investors are are looking for a three-to-five year window of investment at most," says Mr Pickles. | "Private equity investors are are looking for a three-to-five year window of investment at most," says Mr Pickles. |
| "But for a pay-TV channel you need a longer period than that to get established. It is very hard to launch a pay-TV channel and then consolidate, particularly when you have someone like Sky who is so dominant. | "But for a pay-TV channel you need a longer period than that to get established. It is very hard to launch a pay-TV channel and then consolidate, particularly when you have someone like Sky who is so dominant. |
| Winning US PGA golf rights was seen as a good move by Setanta | Winning US PGA golf rights was seen as a good move by Setanta |
| "At the start of 2008 - after the surge in interest and customers brought about by Setanta's two Premier League packages - there was talk of the firm being up for sale for £1bn, which was judged to be too much." | "At the start of 2008 - after the surge in interest and customers brought about by Setanta's two Premier League packages - there was talk of the firm being up for sale for £1bn, which was judged to be too much." |
| Potential investors would have seen that there were only two years left on their Premier League deal, and there was no guarantee Setanta would win again when the rights came up for renewal. | Potential investors would have seen that there were only two years left on their Premier League deal, and there was no guarantee Setanta would win again when the rights came up for renewal. |
| "This was their difficulty - when TV deals are sold in three-year cycles it is hard to show that you have an established and long-term portfolio of rights for investors," says Mr Pickles. | "This was their difficulty - when TV deals are sold in three-year cycles it is hard to show that you have an established and long-term portfolio of rights for investors," says Mr Pickles. |
| Despite reported interest from Disney sports channel ESPN there were no takers, and doubts were being expressed about some of Setanta's deals. | Despite reported interest from Disney sports channel ESPN there were no takers, and doubts were being expressed about some of Setanta's deals. |
| FA Cup magic? | FA Cup magic? |
| For example, the year before, in 2007, Setanta had signed a deal with the Football Association to show FA Cup matches and England home friendly matches. | For example, the year before, in 2007, Setanta had signed a deal with the Football Association to show FA Cup matches and England home friendly matches. |
| From 2008 to 2012 it would show 25 FA Cup matches a year and eight England friendlies across the contract. | From 2008 to 2012 it would show 25 FA Cup matches a year and eight England friendlies across the contract. |
| "I don't think that was such a great deal for Setanta," says Mr Pickles. "You might only get two or three big FA Cup matches a year, and you have to wonder how many people are going to pay to watch an England friendly match." | "I don't think that was such a great deal for Setanta," says Mr Pickles. "You might only get two or three big FA Cup matches a year, and you have to wonder how many people are going to pay to watch an England friendly match." |
| Setanta lost one of its two 23 game packages for the 2010 to 2013 period | Setanta lost one of its two 23 game packages for the 2010 to 2013 period |
| In 2007 Setanta had also launched a sports news channel in competition with Sky's offering. That ate up millions in capital. | In 2007 Setanta had also launched a sports news channel in competition with Sky's offering. That ate up millions in capital. |
| The company did do a good deal, according to Mr Pickles, in winning exclusive rights to England's away World Cup qualifiers, but they then suffered a public relations disaster in a row over selling the highlights to such games to terrestrial broadcasters such as ITV and the BBC. | The company did do a good deal, according to Mr Pickles, in winning exclusive rights to England's away World Cup qualifiers, but they then suffered a public relations disaster in a row over selling the highlights to such games to terrestrial broadcasters such as ITV and the BBC. |
| Setanta could not agree a deal to sell on the highlights to ITV or the BBC. | Setanta could not agree a deal to sell on the highlights to ITV or the BBC. |
| Many fans were angry they were unable to watch highlights of the games on an analogue channel and blamed Setanta - which said it had not received a financially acceptable offer. | Many fans were angry they were unable to watch highlights of the games on an analogue channel and blamed Setanta - which said it had not received a financially acceptable offer. |
| In the meantime the recession was starting to bite and people were thinking twice about sports pay-TV, particularly if they already subscribed to Sky. | In the meantime the recession was starting to bite and people were thinking twice about sports pay-TV, particularly if they already subscribed to Sky. |
| 'Questions raised' | 'Questions raised' |
| A massive blow came in February this year when Setanta failed to retain the rights to their two packages of English Premier League rights for the 2010 to 2013 period, winning only one tranche of 23 games. | A massive blow came in February this year when Setanta failed to retain the rights to their two packages of English Premier League rights for the 2010 to 2013 period, winning only one tranche of 23 games. |
| "That really raised questions about the viability of their business model," says Mr Pickles. | "That really raised questions about the viability of their business model," says Mr Pickles. |
| "They went into those negotiations with about 1.5 million customers, and would have been looking to expand their Premier League audience. | "They went into those negotiations with about 1.5 million customers, and would have been looking to expand their Premier League audience. |
| "But it seems the private equity partners said they were going to see if they could bid less and get away with it. They didn't, and Sky got the fifth package." | "But it seems the private equity partners said they were going to see if they could bid less and get away with it. They didn't, and Sky got the fifth package." |
| If Setanta does collapse there will be a scramble to acquire its many rights, with ESPN seemingly poised to finally make inroads to the UK football broadcasting market. | If Setanta does collapse there will be a scramble to acquire its many rights, with ESPN seemingly poised to finally make inroads to the UK football broadcasting market. |