Setanta Sports on brink of collapse

THE BACKERS of Dublin-based pay television group Setanta Sports were making concerted efforts last night to save the broadcaster from collapse.

Sources close to Setanta said the company could be placed into administration later this week if new funding could not be secured for the business.

Such a move would threaten 430 jobs, including about 200 in Ireland. Accounting firm Deloitte has been lined up to handle any administration of the business.

Setanta could lose all its sports rights if it is placed into administration, with the packages reverting back to the rightsholders.

Its big-ticket rights include English Premier League football, the Scottish Premier League (SPL) and the PGA golf tour in the US. Setanta has recently tried to renegotiate these rights, in some cases seeking to shave 25 per cent off the costs.

Setanta, founded in 1990 by Irishmen Michael O’Rourke and Leonard Ryan, yesterday missed another £3 million (€2.2 million) payment to the SPL. This puts it in default of its contract with the SPL, which only recently agreed a new four-year deal with Setanta for live rights to Scottish soccer.

About 30 per cent of Setanta’s 1.2 million premium subscribers in Britain live in Scotland and retaining these rights is vital to the company’s future.

Setanta is also due to pay about €40 million to the English Premier League later this month as part-payment for its live rights.

An emergency board meeting was held in London yesterday to discuss the options open to the Irish company, which has been seeking to raise more than £50 million.

It is understood that two offers, involving shareholder groups, have been received for Setanta Sports Holdings Ltd, the parent group for operations in Britain, Ireland, the US, Australia and Canada.

One of these is thought to include Mr Ryan and Mr O’Rourke and a group of investors in the business who were assembled by Goldman Sachs.

These investors are believed to have €300 million in loan notes outstanding to them.

The other offer is thought to have been submitted by Doughty Hanson, a UK private equity firm and Setanta’s biggest single shareholder. Doughty also owns TV3.

It was not clear last night if either bid would be sufficient to save the business from administration.

Setanta also held talks recently with Disney-owned sports channel ESPN, but the negotiations have so far failed to yield an offer.

It is understood that Setanta’s backers are looking at possibly spinning out the Irish and international business.

Setanta Sports Ireland is believed to be modestly profitable with annual revenues of more than €40 million. It has a separate shareholder structure with music promoter Denis Desmond owning 20 per cent and the Setanta parent company controlling the balance.

It holds rights for certain sports that apply to Ireland only, including Saturday afternoon games from the Premier League in England, Magners League rugby and Formula One. "Hopefully there is a way of ringfencing Ireland," one informed source told The Irish Times.

Setanta’s difficulties began in February when it lost one of its two packages of live rights to the English Premier League to rival Sky from August 2010.

Setanta retained the right to show 23 games on Saturday evenings but lost its coverage of Monday night games.

Setanta is due to pay £159 million for its package, covering three seasons. In 2006, it broke Sky’s monopoly by paying £392 million for exclusive coverage of 46 matches.

Failing to retain the two packages made it difficult to refinance the business against the backdrop of the global credit crunch.