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Friends of O’Rourke and Ryan told me not to underestimate them, however. They were working round the clock to find a way out of trouble. A lifeline appeared in the form of the Russian-American billionaire Leonard Blavatnik, who is injecting £20 million in exchange for a 51 per cent stake. Other investors, including Big Brother-maker Endemol, are also being lined up as part of a refinancing that could raise a further £20 million. The fact that the existing investors — Doughty Hanson, Balderton Capital and Goldman Sachs — are willing to be drastically diluted shows just how perilous things were. Setanta says it’s confident of getting the finance in place, but this is clearly a race against time; if a crucial £10 million instalment is not paid to the Premier League by Friday of this week, it’s game over.
If the Irish duo do pull through, however, it will be an act of survival to rival Gordon Brown’s. And like the Brown regime, what remains will look much diminished. Setanta now has a valuation of around £80 million — from the £1 billion talked of in February — and its business model looks broken; if rescuing it from the brink of collapse was difficult, nursing it to profitability will be far harder.
Setanta was the quintessential Celtic Tiger cub. In the boom years it grew quickly, borrowed heavily and took up residence in a swish development beside the Liffey, itself a product of Dublin’s property bubble. When, in 2004, the plucky Irish insurgent decided to take on Sky and bid for English Premier League rights, the break-even target of 1.9 million UK subscribers looked a cinch; 1.2 million were swiftly signed up.
O’Rourke and Ryan were already part of modern Irish folklore. In 1990, when the BBC and ITV both decided not to air Ireland’s World Cup group stage game against Holland, the two young entrepreneurs bought the rights cheap and screened the game in a ballroom in Ealing, charging punters £10 a ticket to see Jack Charlton’s side draw. It was the kind of scheme that wouldn’t have been out of place in Roddy Doyle’s Barrytown Trilogy.
The first sign of trouble for Setanta came in February, when it was outbid by Sky for one of the five packages of live Premier League games; from 2010, the Irish broadcaster will screen 23 matches, compared to Sky’s 115. Losing out on the package could lead to ‘mass defection’ of subscribers, according to analyst Toby Syfret of Enders, meaning Setanta is unlikely to hit that magic 1.9 million. In fact, the target was always unrealistic because Setanta overestimated demand for a second premium sports channel. Both channels screen other sports, but it’s Premiership football that sells, and anyone willing to pay for it has Sky Sports. The number who might shell out another £12 a month for a few extra games was always going to be relatively small: most fans will watch those 23 matches in the pub.
Setanta has also made some pretty awful bets. Industry sources say that the deal it cut with Virgin Media gives the cable firm 85 per cent of subscription revenues, instead of the standard 50/50 split; it hoped the deal would bring a much bigger audience, and with it bigger ad revenues. In a deep advertising recession, it was a terrible move. Similarly, Setanta banked on exponential growth in Top Up TV, whereby premium services would be delivered through Freeview boxes instead of by dish or cable — but that simply failed to materialise.
No one in the industry really wants to see Setanta fail. In the Scottish Premier League, some smaller clubs would go under without the rights payments, while the English Premier League has seen the amount it earns from television rights soar thanks to Setanta. Ironically, Sky also has an interest in keeping its competitor alive. Ofcom is currently carrying out a review which could force Sky to wholesale its football content to competitors at regulated prices; the EU is also considering new legislation. Setanta’s collapse would only add weight to the argument that Sky is impossible to compete against.
This sympathy from competitors doesn’t always extend to the fans, however. Tales of Setanta’s poor customer service are legendary, and it has made horrendous public relations mistakes. Who can forget, for example, its decision to ask the BBC and ITV for a ridiculously high price to air highlights of England’s World Cup qualifier against Andorra last year? The terrestrial broadcasters wouldn’t buy the clips, so fans didn’t see footage of the 2-0 win for England. At the match itself, the chant was ‘We hate Setanta’. Elsewhere, hostility towards Setanta is just about the only thing Arsenal and Spurs fans agree on.
Sources close to Blavatnik say he wouldn’t invest if he wasn’t convinced that Setanta can become profitable. Others point out that he has snapped up, for not very much, a controlling stake in a venture that has more subscribers than Sky Sports did in its early years. With mass joblessness on the horizon, it’s difficult to see how Setanta can win more customers on its present business model, however.
Whatever Setanta does, O’Rourke and Ryan deserve a salute for engineering an unlikely escape — so far. The survival of a venture that was so close to the edge is a rare tale in these times. But as they race to put the refinancing in place this week, they may be troubled by the story of the mythical Irish warrior (also called Cuchullain) after whom it was named. Setanta’s great deeds gave him everlasting fame, but his destiny was to die young.
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