Years of playing maverick ends in Eir embrace
New financial muscle should help sports broadcaster secure rights deals
The genesis for Setanta began in 1990 when Mickey O’Rourke and Leonard Ryan organised a showing of the Ireland-England match at the Italia ’90 World Cup in a London pub
After 23 years operating as the plucky underdog in the pay TV arena, Setanta Sports is about to accept the warm corporate embrace of Eir, Ireland’s biggest telco. It will be interesting to see how this marriage plays out.
Eir’s chief executive Richard Moat described the deal, first revealed in The Irish Times last month, as a “game changer” for his company.
It’s certainly a potentially transforming deal for Setanta and it could also add a little spice to the sports rights market in Ireland if the company can bring Eir’s financial muscle to bear.
The genesis for Setanta began in 1990 when Mickey O’Rourke and Leonard Ryan organised a showing of the Ireland-England match at the Italia ’90 World Cup in a London pub for their friends.
They then cajoled the BBC into giving them a feed to show the Ireland-Netherlands game for £2,000 as the match wasn’t going to be on TV in the UK.
In 1992, Setanta was set up and it made its reputation showing GAA to expats. The business built steadily before making a major breakthrough in 2006 by securing the live rights to 46 English Premier League matches per season from 2007 for €392 million. Backing came from heavyweight financial investors such as Balderton Capital, Doughty Hanson and Goldman Sachs.
This was Setanta taking on Rupert Murdoch’s Sky in its own backyard. Its portfolio also included Scottish Premier League soccer, PGA golf in the US and a raft of other sports. It was available in about 3.5 million households between satellite, cable and Freeview.
But it all came crashing down in 2009 after it lost one of its Premier League packs to Sky.
Break-evenThe Irish Times
The Irish business survived with the support of Irish concert promoter Denis Desmond. Mr O’Rourke later took sole control of the business. In March he said revenues for the “whole Irish business are circa €30 million” with subscriber numbers “well over 100,000”.
The company, he said, made a “small profit” in 2014 and “we’ll do the same” this year in spite of a €4 million investment in a high-definition channel in August, the launch of a Setanta playback service and the acquisition of live rights to Uefa’s Champions League and Europa League for three years from next season. He predicted a double-digit rise in revenues for this year.
Eir will give Setanta some financial muscle in future rights negotiations. It recently lost out to Sky Sports for the live English Premier League games for broadcast in Ireland on Saturday afternoons.
Setanta’s relationship with the GAA goes back 23 years while Eir is one of three sponsors of the All-Ireland football championships.
Eir said acquiring Setanta will give it some unique content but was coy on how it might leverage its ownership of the business to win new customers for its Eir Vision TV package.
Setanta has a long-standing relationship with Virgin Media, where Setanta Sports is offered to that cable company’s customers as part of their basic package. The full Setanta portfolio is also available for a charge.
Mr O’Rourke said yesterday that Setanta has a “terrific relationship” with Virgin. “I wouldn’t imagine things would change too much.”
Setanta is also carried on Sky’s platform.
In the end it might all come down to price to tempt customers away from Virgin and Sky, who between them provide TV services to more than one million homes and businesses.
A lot of the value in Setanta’s business is tied up in its contract with BT, which runs until 2019 and allows it to offer the British telco’s channels in Ireland.
BT looks set to be a long-term player in sports broadcasting and doesn’t appear to have any appetite to sell its TV packages in Ireland directly but it’s still a punt by Eir that this will continue to be a long-term relationship.
It also remains to be seen how Setanta will fare when Mr O’Rourke leaves the business, and if it is rebranded under the Eir name. He’s locked in to a two-year earnout so there won’t be a short-term impact.
Can it survive his departure? Will this tight knit, edgy company flourish amid the corporates structures of Eir? Just as with any football match, it’s the uncertainty of the outcome that makes its fascinating.