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Archived News from March 2009

6th March 2009 12:38

Conference chiefs have much to ponder as Setanta loses a TV contract
Thursday, February 12, 2009

THE NEWS that Setanta Sports had lost one of their two live Premier League coverage contracts, in the new TV deal which will come into force for the 2010-2011 season, must have sent a chill down the spines of league officials and club representatives throughout the Football Conference.
For it doesn't necessarily stop there.
It was the Premier League foothold, secured from Sky two years ago, which allowed Setanta to fill several of its 'slots' with coverage of Blue Square Premier matches.
That deal, which gives home clubs £13,000 and away clubs £2,000 each time their games are covered live, runs for the rest of this season and next.
The way that TV demands keep forcing changes in fixture lists may be a pain in the butt for supporters, but Setanta's cash and the exposure is, in the final analysis, good news for the clubs.
Now, the new TV deal effectively halves the number of Premier League slots available to Setanta, with all the financial implications that will involve.
Setanta does have other strings to its bow — it currently covers the FA Cup and England's away World Cup qualifiers — but it doesn't take a genius to work out that there may be a great deal less left in the pot in future, from both subscriptions and advertising.
And worryingly, if Setanta's regular exposure of the BSP is slashed or, even worse, burned all together, what will Blue Square themselves think about that?
The Conference Board must be looking fearfully down the double-barrelled shotgun of a reduction in their television AND sponsorship income.
In the meantime, how will Setanta approach next season?
A doomed deal will be running down to the finish line, and it would hardly be a shock if their bosses in HQ in Dublin will be working out ways to save as much money as possible for leaner times ahead.
There may be candidates to pick up where Setanta leave off.
Sky themselves could be interested, and Disney-owned US network ESPN would like to break into the European soccer market sooner rather than later.
There is much for Conference chairman Brian Lee, chief executive Dennis Strudwick and their board to think about.
Daily Telegraph
Cash-strapped Setanta ready to hand back TV contracts
Setanta will consider handing back some of its portfolio of sports rights in an attempt to stave off collapse, a move that will prompt concerns that the satellite broadcaster could echo the disastrous failure of ITV Digital.

By Paul Kelso
04 Mar 2009

Following Telegraph Sport's disclosure that Setanta failed to meet a scheduled payment of at least £10 million to the Football Association this week it has emerged that the broadcaster is seeking to renegotiate all its rights deals.

The crisis has been prompted by Setanta's failure to retain both the packages of Premier League rights that it presently owns. It paid £155 million for one package of rights but missed out on the second by just £15 million, a failure that could have wide-reaching consequences for rights holders including the Football Association, the Premier League, Premier Rugby, the US PGA Tour and the Scottish Premier League.

Setanta depends on two private equity backers, Balderton Capital and Doughty Hansen, for its viability, and the Premier League rights underpin the business.

With opportunities for raising further capital on the financial markets severely limited the investors are now weighing whether there is any chance of turning a profit with the limited appeal of just 23 Premier League matches a season.

One option is for the company to focus on two or perhaps three core channels offering elite football rather than the 12 it presently offers. While that may offer some comfort to the Premier League and the FA, sources close to the broadcaster confirmed yesterday that it will consider pulling out of other contracts, and try to renegotiate those it wants to retain, arguing that if sports believe the channel is beneficial to the market then they should help them now.

Even for the most prestigious rights holders the implications of this change of direction could be devastating. The decision to withhold the FA's payment indicates that the broadcaster is prepared to withhold cash from rights owners to secure leverage. Technically Setanta has more time to pay the FA, but views this as the start of a negotiation, while the FA is still determined to hold it to the £150 million contract that, along with the £275 million ITV deal, underpins Soho Square's finances.

Setanta's emergence as a serious competitor to Sky in the subscription TV market has been beneficial to many sports, prompting genuine competition and driving steep increases in the value of rights across sport. The concern now is that its withdrawal from many markets could leave some sports in serious financial trouble.

The parallels with ITV Digital, which collapsed in May 2002 after paying a then-staggering £105 million a year for Football League rights, are unavoidable. The Football League failed to secure parent-company guarantees from ITV as part of the deal, leaving it powerless when the company failed and leaving many clubs staring at administration. The question for bodies including the FA is whether they have similar guarantees from Setanta's shareholders.

The Premier League has those guarantees, meaning that Setanta has paid up until the end of this season as well as a deposit on its single package on the next deal.

It remained unclear last night whether the FA has been similarly prudent.
Th Guardian
Setanta and ITV seek to renegotiate contracts• Broadcasters seek meeting in effort to alter payment schedule
• FA determined to hold them to original deals
Digg it Owen Gibson
The Guardian, Wednesday 4 March 2009

The troubled Irish pay-TV broadcaster Setanta is trying to renegotiate its major contracts, including its deals with the Football Association and the Scottish Premier League, as part of an ongoing attempt to safeguard its business.

It has also emerged that ITV is seeking to renegotiate its contracts with major football partners, including the FA, Uefa and Fifa, in an effort to reschedule its payments.

Setanta's attempts to bring down its cost base will increase fears for its future among the sports that rely on it for a substantial part of their income. It is understood that Setanta has already deferred one payment of around £10m to the FA as it seeks to renegotiate its £150m four-year contract and its other rights deals.

Setanta is likely to suggest a range of measures, from restructuring its payment schedules and reducing its total outgoings to threatening to hand back rights if it is unable to reach an agreement.

The company's investors, which include Goldman Sachs, Balderton Capital and Doughty Hanson, are thought to be considering plans to reshape the business into a more modest concern.

Last month, the broadcaster failed in an attempt to return to the negotiating table with the Premier League, having lost out on a crucial package of 23 Premier League matches from 2010 after seeking a reduction on the £392m it paid for 46 matches per season under the current deal. It has also made representations to the government and regulators, arguing that Sky is too dominant in the sports rights market.

As well as the FA, Setanta has contracts with the English Premier League and the Scottish Premier League in football, the Indian Premier League in cricket, the US PGA Tour in golf, and Premier Rugby, which represents the top English rugby union clubs.

But it is understood that the FA, while happy to meet with its broadcasting partners and listen to their concerns, is determined to hold them to their original contracts.

ITV is hoping to "smooth" the payment schedules for its major rights deals ahead of today's annual results announcement, which is expected to show the scale of the economic challenge facing the broadcaster.

Payments for sports rights contracts are generally "front loaded", partly as a response to the ITV Digital collapse in 2002, and partly because sporting bodies have been able to dictate terms of these agreements in recent years.

ITV insiders insist that the FA remains a valued partner and point out that the contract with the organisation is completely separate from that of the Irish pay-TV broadcaster.

As well as its £275m deal with the FA for FA Cup and England matches, which began this season and runs for four years, ITV last year paid £160m to renew its contract with Uefa for live Champions League football and shares the rights to the next two World Cups and the next European Championship with the BBC.

If questions start to emerge over the future of the £425m FA Cup deal with ITV and Setanta, hailed by former chief executive Brian Barwick as a masterstroke in boosting revenues by 42%, it will reignite speculation about his wisdom in freezing the BBC and Sky out of the bidding process in order to secure a big increase.

ITV and Setanta both declined to comment on confidential contractual negotiations. The FA also refused to comment.


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