After much speculation about Setanta’s financial future, there are reports this week that the sports digital TV provider has now actually defaulted on a payment of £3m to the Scottish Premier League. This shows just how bad Setanta’s cash flow position must be and may herald the beginning of the end for the current Setanta customer proposition.
Neither the broadcaster nor the SPL would comment on the matter but one source has revealed an email was sent to Setanta staff in Glasgow confirming the payment had not been made and that no comment was to be given under any circumstances to the media.
Setanta’s future had been seriously undermined following its failure to retain half of the 46 English Premier League games it will screen live until the end of next season. From 2010-11 it will show only 23 English top-flight matches a season.
This default comes as reports in the FT suggest that Setanta is considering a radical reform of its business model that would mean ditching its retail customers and becoming a wholesale supplier.
Claire Enders and Toby Syfret of Enders Analysis said in a note on Setanta’s cash crisis that the participation of BSkyB would be a key to the success of a scheme that was “the one escape route from Setanta’s predicament”.
The note says: “The sum total of £125m in annual cost savings by 2011 comfortably exceeds the current estimated annual operating loss of £90m in Setanta’s UK operation. On balance, we believe that the switch to a wholesale-only model leaves Setanta with a fighting chance, and it is vital it happens quickly.”
A person familiar with the company’s strategy said: “Setanta has been considering a wholesale future because obviously, having lost 23 PL games, the business model as it has existed comes in to question”
This may mean that Setanta’s digital TV customers are left in the lurch before the start of the new football season and will need to work out where they need to go to get their sporting fix. Most likely is that they will need to subscribe to Sky if they do not already, and the “Freeview plus Setanta” option will no longer exist.