Irish sports broadcaster Setanta has failed to pay £3m it owes to the Scottish Premier League, according to reports. It is not yet in technical default, according to research firm Enders Analysis, and has the rest of June to negotiate new terms with SPL authorities.
It is believed to be in negotiations with not just the SPL but many – perhaps all – of the rights partners for sporting events that it shows. The broadcaster itself was playing its cards close to its chest. The last public communication the company made was to boast “strong subscriber growth” last month. It claimed to have attracted 9.6% more viewers to SPL matches in the 2008/09 season than the one before.
Yet this has evidently not translated into commercial viability as the company struggles to make ends meet following the loss of one of its two English Premier League packages in February. The impact of the loss of half its EPL rights has been the subject of some debate: it saved Setanta £78m in annual payments (down to £53m from £131m), according to Enders, but has obviously had a significant impact on its ability to retain and attract subscribers.
A spokesperson for Setanta said the company always expected to be loss-making in the second year of its expansion plans since the market for EPL games was opened to competition. But its failure to secure the second package, with its bid coming in lower than was expected, suggests the company’s financing position was crippled by the onset of the credit crunch.
The UK operation, of which EPL games are the jewel in the crown, “accounts for at least 75% of the total budget and around, we believe, 85% of current operating losses, which were running at the annual rate of about £100m earlier this year,” Enders said. It believes savings it has already negotiated will reduce its annual loss to around £70m and that Setanta has already reduced its £140m non-EPL related costs by 20%.
Bankers involved with the deal between Setanta and the SPL declined to comment, with one person indicating the situation was too delicate to talk about publicly.
Setanta’s top shareholders, Doughty Hanson, Balderton Capital and Goldman Sachs, are reported to have offered £50m to cover its costs, leaving it £50m short of covering its losses, which Enders estimated at £100m. Its backers have already injected £450m into the channel, Enders said.
The SPL did not return calls on the matter.