The demise of Setanta

  

Toward the end of the 2008-09 European football season, Setanta’s financial situation was quickly deteriorating. Shareholders had failed to raise enough funds to give it a viable future. Setanta reportedly held talks with private equity firms that were thought to have offered an injection of millions, but British Sky Broadcasting rejected a request for a £50m interest free loan on a deal that would have seen Sky wholesale Setanta to its own subscribers.

 

With Setanta’s losses in their Europe operations mounting, accountancy firm Deloitte was soon on standby to put the broadcaster into administration. Setanta owed the Scottish Premier League £3m as part of its £31m a year deal. The English Premier League was awaiting a £35m installment payment due on June 15 of its £392m three year contract.

 

The Scottish Premier League stood to suffer if Setanta went into administration. The SPL reached into its own reserves to make payments due to clubs as it tried to find another deal. The English Premier League chose to take a hard line on Setanta by demanding payment rather than to create a solution to keep the network afloat. Then, it was announced that Access Industries, a company run by billionaire businessman Len Blavatnik, would purchase a 51 per cent stake in Setanta to help it to avoid administration. And, production company Endemol was thought to buy a stake as well. But earlier plans by Endemol, to be an equal partner with Access Industries, were trumped by Blatvatnik’s desire for a controlling interest.

 

Eventually, Setanta failed to make a £10m payment to the English Premier League thereby losing its rights to broadcast football fixtures next season, the League then terminated the license agreement and announced that the 46 league matches for the 2009-10 season would be auctioned off. Rescue talks between Setanta and Access Industries to create a life-saving deal ended.

 

The final act came on Monday June 22 when the Premier League awarded ESPN two live media packages for the 2009/2010 season, and one package from August 2010 for the following three seasons. ESPN announced its plans to make its Barclays Premier League coverage "widely available" across multiple pay-TV platforms, and the network has already agreed for its coverage to be retailed by Sky to its residential and commercial customers. ESPN did not indicate subscriptions fees or whether it will launch new channels to broadcast the games.

 

Deloitte is ­standing by to act as administrator and it is likely Setanta will be shut down soon, perhaps this week.