SETANTA SPORTS chances of avoiding being placed into administration later this week appeared to improve last night.
A meeting of the Irish broadcaster’s board of directors adjourned late last night in London with a spokesman for the company confirming that a “number of live options” to rescue the group were being considered.
It is understood that Setanta’s founders, Irishmen Michael O’Rourke and Leonard Ryan, and a group of investors led by Goldman Sachs are seeking to put together a £40 million package to rescue the troubled broadcaster.
It is believed that they were about £5-10 million shy of their target at the start of this week but concerted efforts have been made in recent days to bridge this funding gap.
One informed source said a leading law firm in Ireland had approached a number of high-net worth individuals here in a bid to raise about €6 million for the rescue deal.
Goldman Sachs represents a number of investors who have advanced the broadcaster about €300 million in loan notes.
If successful, this injection of much-needed finance would dilute the shareholdings of private equity groups Doughty Hanson and Balderton Capital.
Setanta appeared to stop taking subscriptions for its pay TV services yesterday. Customers received a message saying, “Oops! Something has gone wrong,” on the website when they tried to book a subscription.
Its telephone call centre was also unavailable. The company initially appeared to explain this as a technical error but it appears to have ceased taking subscriptions until its future has been resolved.
Setanta’s business model was called into question in February when it lost one of its two live rights packages to English Premier League soccer to rival BSkyB.
This means it will be only able to show 23 live games from the Premier League for a three-year period from August 2010. This is half the number in its current landmark £392 million deal, which was signed in 2006 and broke Sky’s monopoly on live Premier League matches.
This loss of the rights resulted in Setanta’s board having to review its business model. It began negotiations with current and potential investors to raise more than £50 million.
The Irish group is believed to have held talks with British telecoms group BT, which is involved in digital TV, and ESPN, a US- based sports channel owned by Disney. These talks have so far come to nothing.
Setanta also sought to renegotiate its other sports rights deals. These include the Scottish Premier League (SPL), PGA golf in the United States and live FA Cup and England away soccer internationals. It was seeking discounts of up to 25 per cent from rightsholders.
The company failed last week to make a £3 million payment to the SPL, leading to intense speculation that the business was on the brink of collapse. It is due to make a payment of more than £30 million to the Premier League in England later this month.
Founded in 1990, Setanta employs about 430 staff, with around 200 based in Ireland.
Setanta Sports Ireland is broadcast as part of the basic packages on the NTL and Chorus cable TV networks here and is understood to be modestly profitable.
It is understood that Setanta’s backers have looked at ways of spinning off the Irish and international businesses. The Irish business is 20 per cent owned by music promoter Denis Desmond.
Setanta has about 1.2 million premium subscribers but, according to analysts, needs 1.9 million to break even. Informed sources said it was close to breaking even but the loss of the Premier League rights raised questions about its ability to retain its existing customer base.
