Setanta shows ITV the way to succeed in commercial TV
By now there is little more to be said about ITV.
The expected bloodbath duly arrived on cue this week and advertising revenue may not recover for 18 months.
How different for ITV’s rival Setanta which is broadcasting the FA Cup and England internationals. The Irish pay TV sports broadcaster goes into the new football season with its tail up. Sunday’s Charity Shield game between Manchester United and Portsmouth is on Setanta.
The progress of Setanta is one of the great business romances. Many companies try to invent or embellish creation “myths” happily lapped up by journalists.
In the case of Setanta there is no need. It really is true. Founders Leonard Ryan and Michael O’Rourke were in London during the Italia 90 World Cup finals frustrated that British broadcasters were concentrating on England versus Egypt and ignoring Ireland against Holland. So they begged the rights, showed the game in a large Ealing pub and charged £10 to get in. Earlier this year there was a very informal testing of the water for a sale of the company, which came to nothing as potential bidders baulked at the £1bn price tag. Such a valuation was not forthcoming this time but may not be too far off in future.
Business is Booming
All round the world, television sports is a booming business that seems as recession-proof as any. It is also the TV genre that is standing up best against competition from on-demand and the internet. If fans are interested in sport they are prepared to pay to see it live. Anything else is an also ran.
Setanta with its 12 sports channels and a basic satellite monthly charge of £12.99 now has more than 3m subscribers – though cable viewers in the UK get a large discount.
Setanta sees no sign of any recessionary effect so far. ITV is also focusing on as much live football as it can get its hands on and other major media players are investing in sport both on and offline.
This week ESPN, the Disney sports company added to its stable by buying Racing-Live.com the independent motor racing website. ESPN already owns similar sites devoted to cricket and rugby apart from its commitment to the more obvious American sports. The big question mark over the future of Setanta is what happens next. Three quarters of the company is held by venture capitalists – and they will need their exit.
Nothing is likely to happen this year because of market conditions. But next year Setanta, which now holds two of the six Premier League rights packages, will have to bid again against BSkyB for the next cycle of rights. The plan is to bid for all six packages with the aim of holding onto the present tally, at the very least. That could be the time for a trade sale, with ESPN an obvious candidate because it wants to expand in Europe and has the necessary firepower. A float in two years has not been ruled out. By then Setanta could be worth more than ITV.