The writing was always on the wall for Setanta
YOU have to admire the sheer tenacity of Setanta’s founding pair, Michael O’Rourke and Leonard Ryan. A lesser team would have let the floundering business die peacefully by now; these two are determined to keep it on life support until the bitter end. Yesterday, I spoke to several analysts to canvass opinion on the broadcaster’s chances: not a single person thought that Setanta has a long term future in the UK.
One analyst put Setanta’s total debts at over £500m. Even if O’Rourke and Ryan manage to raise cash in a fire sale of the profitable US and Irish operations, they are unlikely to raise enough to pay what it owes. And time is running out. If Setanta fails to make a £30m payment to the English Premier League due on Monday, the rest, as they say, is history.
The truth is that the plucky Irish insurgent that was meant to take on Sky was doomed long before it failed to secure a second package of Premier League rights. Although it has managed to pull in 1.2m subscribers, the fundamentals of the business have made it impossible for the broadcaster to stay afloat.
A LONG SHOT
Take, for example, the disastrous deal Setanta cut with Virgin Media. According to industry sources, the broadcaster gave Virgin a staggering 85 per cent of subscription revenues, rather than the usual 50/50 split. Setanta thought that advertising would come flooding in if it could reach a huge audience; in the event of the recession, it was a terrible call.
Setanta’s ambition – the very thing that is now keeping it out of the jaws of administrators Deloitte – has also played a part in its downfall. If, in the UK, it had just focused on Premier League and Scottish Premier League Football, packaged at a lower monthly price, it could have caused Sky a serious headache.
Instead it tried to become a fully-fledged competitor, snapping up deals at the height of the boom. According to one analyst, it paid £100m for ten years of the PGA tour, a investment that would have never seen a return.
Then, of course, there was the firm’s abysmal reputation: the 60 day cancellation period that riled customers; the fact than punters could only cancel with a letter; the call centre phones that were answered by surly staff. And who can forget its refusal to sell World Cup highlights to the BBC, a PR disaster that must rank alongside Gerald Ratner’s proclamation that Signet’s jewellery was “cheaper than an M&S prawn sandwich but probably wouldn’t last as long”.
O’Rourke and Ryan might confound their critics over the next few days, meet the Premier League payment and survive to tell the tale. But even if they do, their days are numbered. Naked ambition can only get you so far. [email protected]