Setanta Considers Altering Model, Becoming Wholesale Supplier
Setanta is "considering a radical reform of its business model that would mean ditching its retail customers," according to a source cited by Ben Fenton of the FINANCIAL TIMES. Under the new proposal, Setanta, which is losing an estimated US$164M annually, would "become a wholesale supplier of programmes, including Premier League football, to broadcasters" such as BSkyB and BT Vision. Enders Analysis' Claire Enders and Toby Syfret in a note on Setanta's "cash crisis" said that the "participation of BSkyB would be a key to the success of a scheme that ... Enders said was 'the one escape route from Setanta's predicament.'" The note reads, "On balance, we believe that the switch to a wholesale-only model leaves Setanta with a fighting chance, and it is vital it happens quickly." But Fenton notes talks that "had already begun about the possibility of wholesaling by Setanta and BSkyB have since broken down over the former's insistence on being paid in advance for its content" (FINANCIAL TIMES, 6/2). In London, James Ashton reported Setanta's financial position was "so parlous" last weekend that it asked BSkyB for a US$82.3M "advance payment on a deal that would have seen Sky wholesale Setanta to its own Sky Sports subscribers." BSkyB rejected the "proposal of an interest-free loan," and Setanta "must now return for crunch talks with rights holders." After "initially asking for a 15-20% reduction in terms," Setanta is "seeking to negotiate some of its rights deals down by 25%." Setanta "has until June 15 to make" a US$57.6M payment to the EPL (LONDON TIMES, 5/31).
SPL DEFAULT: In Manchester, Ewan Murray reports fears "intensified for the future of Setanta last night as it emerged it has defaulted on a payment" to the Scottish Premier League (SPL). Setanta is "about to enter the final season of a four-year SPL deal," worth US$89.7M. Setanta has been "thrown into turmoil following its failure to retain half of the 46 English Premier League games it will screen live until the end of next season" (Manchester GUARDIAN, 6/2).
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