Five weeks till kick-off and Sky ruling offers Irish rival Setanta an open goal
Murdoch firm is barred from showing football on Freeview, leaving path clear to claim 11 million viewers
Owen Gibson and Richard Wray
Monday July 9, 2007
Five weeks before the 2007-08 Premier League football season kicks-off, Irish pay TV group Setanta is making a grab for Britain’s armchair supporters, slashing the cost of its sports channels for satellite and Freeview customers as it starts to screen Premiership matches.
Setanta’s move is an attempt to score a goal before bitter rival BSkyB has even got its boots laced up. Freeview subscribers with the right sort of decoder will be able to access the 46 live Premier League matches that Setanta has to itself for 9.99 a month, without needing to sign up for an annual contract. Satellite users - whether or not they have a Sky subscription - will be offered eight Setanta channels for 9.99, down from 15.99.
Setanta’s games, kicking off on August 11, include matches played by the top four clubs and represent the first time that Freeview users have been able to watch live Premier League action. The first 19 matches screened include Aston Villa taking on Liverpool, with Fernando Torres making his Premier League debut, and Spurs’ 125th anniversary celebration game on October 1.
Sky’s own plans to get football onto a pay-TV service on Freeview, meanwhile, were kicked into touch by the media and telecoms regulator last month.
Ofcom’s decision to launch a public inquiry into Sky’s plans for three pay-TV channels on the digital terrestrial TV (DTT) platform - which were expected to include football coverage - has delayed the satellite broadcaster’s launch until at least next year. As a result, Setanta has the 11m Freeview households in Britain to itself for the start of the season.
The new pricing plans follow Setanta’s swoop on high-profile presenters with Blackburn Rovers and Spurs captain Tim Sherwood lured from Sky to sit alongside his former team-mate Les Ferdinand as well as Steve McManaman and anchorman Angus Scott. Setanta will also be available through BT’s Vision platform, along with some matches which BT has bought. Setanta is also on Virgin Media though prices have yet to be finalised.
Setanta was originally blindsided by Sky’s Freeview move, but has remained confident throughout it can boost its subscriber figures five-fold to about one million by the beginning of the 2008-09 season. At that point its deal to show FA Cup and England matches will kick in.
Some in the City, however, are openly speculating about whether Setanta will generate enough interest to keep its venture capital investors happy. It won’t be easy - the list of those who have taken on Sky and won is short.
Setanta has been keen to paint its run of sports rights deals as the equivalent of classic FA Cup giant killings. Following the headline-grabbing 392m swoop for 46 live Premier League games a season, it made a 9m bid for the rights to US golf coverage, and pulled off the dramatic snatch of FA Cup and England games from the BBC and Sky, in partnership with ITV.
Appearing alongside ITV chairman Michael Grade and FA chief Brian Barwick - two men trying to revive fading national institutions - Setanta director of sport Trevor East was clear about its place in the pecking order.
“We are regarded as new kids on the block. But this will make us a very attractive alternative or addition to Sky in the sports TV market. We’ll have more live football than any other UK broadcaster once this deal starts,” he said, referring to its coverage of the Nationwide Conference, Scottish Premierleague and other European leagues.
Joint chief executive Michael O’Rourke agrees. “Before, you might have been able to argue that you could take or leave it. But as a serious football fan it would now be hard to say you don’t want Setanta.” That stance is a subtle shift from Setanta’s line when it won its slice of the Premiership rights, positioning itself as a possible alternative to Sky Sports rather than an add-on.
But amid the romance of Setanta’s rise to prominence, its FA Cup bid raised the volume of chatter in the City about its ability to make the gamble pay. At a time of upheaval in the pay TV market, analysts have been wondering whether it can make its numbers add up.
The 425m secured for the FA by Barwick, a former BBC and ITV sports chief, was a 42% improvement on the previous deal, while the Premier League broke all records by bringing in a total of 2.7bn in its latest round of contracts. Some are now openly speculating that the rights market is close to overheating again, as happened in the years after the dotcom crash.
The big question is whether there is a rump of sports fans who find Sky too expensive and who would be content with digital channels via Freeview or satellite, plus the add-on of Setanta Sport.
Fans can subscribe to Sky Sports 1 and 3 for 34 a month. Viewers would then have to pay extra 9.99 for Setanta, either on satellite or through a Freeview box. So, for those who absolutely must have all top-flight football and golf, it will cost at least 43.99.
There is a lingering suspicion that while Setanta may have secured a range of attractive rights, it is lacking the exclusivity that attracts new subscribers. Sky still has the pick of the Premier League action, the best time slots and the biggest matches.
Insiders say Sky, meanwhile, decided a long time ago that England games and the FA Cup didn’t drive subscriptions. While it still dug deep to secure the rights to 92 Premier League games a season, paying 1.31bn over three years, they also point to the breadth of Sky’s appeal. “Sky Sports is about more than football and Sky is about more than Sky Sports,” says one.
But Mr East, the former number two at Sky Sports, is universally regarded as a canny operator and Setanta executives insist they have secured the rights they want for less than they expected to pay. In any case, the David and Goliath story is a mite disingenuous. While it is true that founders O’Rourke and Leonard Ryan launched the company with a loss-making Republic of Ireland World Cup match beamed to the back room of a pub in west London in 1990, it has since become a major player in Ireland and the US. Although it is still relatively unknown in the UK, Setanta is majority-owned by investors seeking serious returns, including Benchmark Capital, Goldman Sachs, Doughty Hanson, Adam Street Partners and others.
It is the long-term intentions of those venture capitalists that is sparking most speculation. Mr Ryan insists they are in for the long haul. “We have raised 400m in the last two years. It’s a fully funded business - if we fall a little bit behind it’s not going to be make or break,” he says, adding that the naysayers should wait and see how it fares.
One of the unanswered questions is how many Freeview boxes have the necessary card-slot to accept the Setanta service. But the company remains confident that those without one will be happy to pay 40 or so to upgrade.
Some with knowledge of Setanta’s targets believe it will struggle and suspect it is holding out to be bought by a rival, perhaps Virgin Media or Disney-owned ESPN, which made a low-key entry in the British market last year. Setanta’s founders and core team are relentlessly upbeat and insist its independence and platform neutrality are its strengths. “Our investors are not sitting around waiting for someone to come in and buy the business. They want to build it and grow it,” says Ryan.
Over at Sky’s Osterley headquarters, meanwhile, the broadcaster that has changed the face of football is limbering up for a scrap. For O’Rourke, it can’t come soon enough.
Line-up to take on Murdoch
From August 2007 46 Premier League games a season, with up to 40 featuring the top four clubs in the race to pick up the trophy (pictured). (Sky has 92 games).
From August 2008 25 FA Cup games a season, including two quarter-finals and one semi-final exclusively live. Final shared with ITV. (ITV has 16 matches but has first pick of the best ties). FA Community Shield, three international friendlies, all under-21 and B matches, FA Youth Cup, FA Trophy, FA Vase
Scottish Premierleague 60 games a season
Nationwide Conference 79 games a season
European football French, German, Italian, Portuguese and Dutch.
Golf US PGA Tour, Champions Tour, Nationwide Tour, Asian Tour
Rugby union Celtic League, French Top 14
American sport NHL, MLB, NCAA basketball
Racing 30 of 59 courses
Motor sport British Touring Car Championship, Nascar