Setanta seeks to raise £159m for live soccer rights

IRISH PAY TV broadcaster Setanta Sports has hired London-based merchant bank Close Brothers to raise at least £159 million (€181 million) to fund the acquisition of new English Premier League live football rights.

It has also emerged that Russian oligarch Len Blavatnik holds a 3 per cent stake in Setanta, which he acquired around three years ago.

Mr Blavatnik, who is a US citizen, heads Access Industries, which also holds a stake in Top Up TV, a pay television broadcaster in the UK.

The wealthy businessman hit the headlines for all the wrong reasons in recent weeks when his petrochemicals business Lyondell Basell filed for bankruptcy protection. This led to a row with Royal Bank of Scotland, which had been forced to write off a £2.5 billion loan to the company.

It is understood that Close Brothers will seek to raise the funds from existing shareholders and potential new investors in the sports channel.

Last Friday, Setanta secured one package of live Premier League football rights in England. This will cost it £159 million and cover 23 Saturday evening games each season for three years from August 2010.

Setanta is believed to have secured these rights at a 20 per cent discount to what it paid during the auction in 2006. Setanta paid £392 million for its two packages last time round.

But Setanta failed to retain its live rights to Monday night games. That package was won by its satellite rival BSkyB, which secured five of the six rights packages on offer.

It is understood that Setanta will seek to buy some of the Monday night games back from Sky. This would require Close Brothers to raise more than £159 million.

It is understood that Close Brothers has been given a mandate to raise the necessary cash.

Setanta’s existing shareholders include Doughty Hanson (which owns TV3), Balderton Capital, Goldman Sachs and private clients of stockbroker Davy.

The broadcaster’s two founders – Irishmen Leonard Ryan and Michael O’Rourke – are thought to own about 17 per cent of the business between them.

Losing one of its two Premier League packages was a blow to Setanta, which is loss making and has estimated debts of £150 million.

The Irish firm has built a premium subscriber base of about 1.5 million customers in the past three years, largely based around its access to Premier League soccer.

Setanta recently attracted more than one million viewers for a league game between Liverpool and Everton, a record audience for the Dublin-based broadcaster that compares favourably to Sky.

Setanta also owns rights to US PGA golf, the FA Cup, England internationals and Scotland’s SPL, but the English Premier League is the jewel in the crown.

Last year Setanta was reported to have been for sale, but the £1 billion price tag failed to attract any bids. The company hired financial group Goldman Sachs to test the market for bids after receiving an unsolicited approach in the run-up to Christmas 2007.