The Sunday papers were full of further reports about Setanta’s potential demise. The financial situation appears to be reaching crisis point with the prospect of the sports digital TV company falling into administration this week.
Reports suggest that Deloittes is on standby to take over as the pay TV business struggles to close a funding gap of nearly £50 million. A board meeting on Saturday failed to achieve a breakthrough, raising concerns that television sports rights deals will cease in Scotland and England.
Setanta failed to make a £3 million payment to the Scottish Premier League (SPL) last week because it could not release cash to third parties until it found out whether it was viable. It is thought that it will be in default from today. As a result Setanta’s board will hold another crisis meeting today. It has so far failed to persuade shareholders to invest further in the business, or find a new investor or buyer, which is estimated to be losing £90 million a year.
Setanta’s main rights partners are: the SPL, the Football Association, the FA Premier League and the US PGA, the American golf body.
Setanta has five years to run of a £125 million contract with the SPL, as well as one season left on its three-year, £392 million deal with the FA Premier League, with a new £159 million three-year deal to follow after that. It also holds rights to show some FA Cup and England games, bought for £150 million in a four-year deal.
Setanta customers access Setanta’s content in four ways: either with a Setanta Freeview box; via Virgin Media (as a free add on to the XL TV package); via BT Vision – BT’s digital TV proposition; or as an expensive add-on to Sky TV.
If the company falls into administration, it is thought that the rights will return immediately to the rights holders. It will be up to them to frantically find a new bidder to show their content and make up their shortfall in revenue. The choice of bidders will be limited – Sky, ITV and BBC spring to mind, with BT and Virgin Media outside possibilities. But we suspect that in the short term we may see smaller packages of games being sold, whilst the bigger long term deals are thrashed out. So it will be up to Setanta’s customers to read the sports press to find out where the rights have ended up…