Sports Rights: Premiership

DMC

Two articles of note today....

Setanta and cable to bid for Premiership rights
http://observer.guardian.co.uk/business/story/0,6903,1530058,00.html

James Robinson, media business correspondent
Sunday July 17, 2005
The Observer

Cable company Telewest is in talks with Setanta, the Irish pay-TV group, about forming an alliance to bid for the television rights to the football Premier League.

The cable company, which is in merger talks with rival operator NTL, has been in negotiations with Setanta for several months.

It is understood that the talks could lead to the merged cable company taking a stake in Setanta ahead of a joint bid for the rights when they come up for auction next year.

Securing the rights would be a major coup for Telewest. The Premier League rights are currently owned by Rupert Murdoch's BSkyB, but its contract expires in 2008.

The European Union competition commission has ruled that the Sky deal is anti-competitive and has ordered the FA Premier League to split the next set of rights into different packages and sell them to separate broadcasters.

The FA is in talks with the EU over how the games will be divided, but Setanta and cable are likely to bid for at least one of the packages when they become available.

Setanta is a small company - with a turnover of around £25 million - but it has a growing reputation in the global sports rights industry.

Last year, it outbid the BBC for the right to screen Scottish Premier League football games.

It recently poached BSkyB executive Trevor East, who was part of the team that negotiated Sky's £1 billion Premiership deal. Sky's former finance director, Richard Brooke, also works for Setanta, as director of corporate development.

Merger talks between Telewest and NTL were expected to be completed this month, but they have stalled over the sale of Telewest's content business, Flextech.

Telewest shareholders believe it is worth £1bn, but the highest offer the company has received is believed to be around £850m.

Telewest may put Flextech up for auction, but that is likely to delay the merger until the autumn.

Setanta and Telewest declined to comment.

Irish niche broadcaster has eye on Premier prize
James Robinson on the challenge by upstart Setanta to BSkyB's football supremacy

Sunday July 17, 2005
The Observer

It began by serving the smallest of sporting niches, beaming Gaelic football games to crowds of Irish ex-pats in rowdy London pubs. But satellite broadcaster Setanta, named after a mythical Celtic warrior, could soon reach a far wider audience.

Founded by two young Irish entrepreneurs, Michael O'Rourke and Leonard Ryan, over a decade ago, the company has been the talk of the TV industry since it poached Sky executive Trevor East earlier this year. East, with his former boss Vic Wakeling, built Sky's sports output from scratch, securing the Premier League rights that were crucial to its early success.

East's appointment, officially confirmed last week, follows that of former Sky finance director Richard Brooke, who is now Setanta's director of corporate development.

The high-profile hirings, so industry orthodoxy dictates, are a sure sign that the small Irish company is preparing an audacious bid for the FA Premier League TV rights when they come up for sale; a deal completing Setanta's transformation from a specialist minority sports broadcaster to a mainstream pay-TV operator in one of the world's largest markets.

It would be a remarkable feat for a company that was founded soon after the 1990 World Cup. O'Rourke and Ryan, then twentysomething professionals working in London, realised that the match between Ireland and Holland wasn't being shown on ITV or BBC. They hired the Top Hat, an Irish pub in West London, to show the game, setting up a satellite link and charging £10 entry. Although they lost money on the night, O'Rourke and Ryan had stumbled across a valuable market: Irish expats who wanted to watch domestic sport.

They subsequently formed Setanta and secured the foreign rights for Gaelic football and hurling, but the business took off when it bought struggling sports network Sportscast soon afterwards, acquiring a valuable satellite network serving 1,500 pubs and expanding its customer base.

It moved from pub lounges to living rooms five years ago, setting up a TV channel to broadcast direct to British homes on the Sky platform, and last year launched Ireland's first dedicated sports channel, which screens the Premier League and Formula One racing. Setanta now runs seven satellite channels in seven countries and last year took full control of NASN, a global channel that screens American sports outside the US, from billionaire Microsoft co-founder Paul Allen.

It surprised the industry, and many Scottish football fans, by grabbing the rights to the Scottish Premier League from the BBC in a £35 million deal last year and went on to bid for the rights to the English football league last month, eventually losing out to Sky.

But despite its growing reputation as a major player in the global sports rights market, the chances of a tiny Irish broadcaster (turnover €35 million) outbidding BSkyB for the £1 billion Premier League rights seem remote. Sky has built its business on the back of football coverage, though it is less dependent on it than it was, and has consistently outbid rival broadcasters for the right to screen games.

It has hung on to the rights in the face of intense pressure from the EU competition commission, which has waged a long campaign to force it to sell some games to rival broadcasters.

Negotiations between the EU and the FA are continuing, but an agreement on how the rights will be sold is likely by the end of the year.

'We are on the last mile, but the last mile is often the longest', says a source close to the talks.

Industry observers say that the Premier League would like to finalise a deal with the EU by the autumn, with the tender documents out next spring, to give prospective bidders time to work on their offers.

The most likely solution is for the rights to be split into two packages, with Sky almost certain to retain one of them, and the other then being put up for auction to a third party. That is certain to generate interest from a range of broadcasters, including ITV and perhaps even the BBC.

A bid for both packages may prove beyond Setanta's reach, but it is likely to table an offer for one of them, although the value of the bid will depend on the number and quality of the games that are made available.

'It's a bit like Chelsea in the transfer market,' according to Alan Flitcroft, head of Ernst & Young's European Sports Group. 'Sky will make their move and get what they want, and everyone else will battle over the spoils.'

Setanta is talking to Telewest, which is in the final stages of a merger with its rival NTL, about tabling a joint bid.

The cable companies have completed painful restructuring programmes which have left them virtually debt-free and with the financial firepower to buy Premier League games, the best way to attract new subscribers.

But if a deal with Telewest falls through, Setanta could bid alone, according to City sources, using the revenue generated by selling rights to pubs to secure funding from a financial backer.

Some industry analysts estimate that Sky makes up to £100 million a year by selling Premier League packages to pubs, and Setanta could exploit the strained relationship between Sky and some of its largest clients, who complain that they are being over-charged.

Morgan Stanley media analyst Sarah Simon says: 'They could do a deal with the pubs, which pay Sky a lot of money. Some of them have been dumping Sky anyway and Setanta could undercut Sky with its own offer and use that to underwrite a bid.'

Mossy Monk

as much as i like competition

DAMN

reason 1: another addition to the sub
reason 2: Setanta cannot cover football. useless presentation
reason 3: no widescreen (that could change i suppose)

channelsurfer

doesnt look good for rte retaining the irish 3pm saturday rights. I would say they will go to setanta for sure in full this time.