Setanta on its last legs?

We have alluded to it a couple of times over the last fortnight or so, but with every new day, Setanta looks two days closer to shutting up shop. The Guardian has written up a couple of articles on the mess recently. As an added bonus, it's a legitimate newspaper, so we can almost believe what they write is true. Inside, we'll look at the problems the Irish broadcaster is facing.

The current crisis centers around Setanta failing to pay its last installment to the SPL for the 08/09 season. Last Monday, the Irish channel was due to pay out £3m to the Scottish top flight, but failed to do so. In fact, it seems, they didn't even mention that the money was not forthcoming. Now, a week later, the board of Setanta is meeting, trying to figure out how to come up with capital for that payment as well as another 40 million pounds which are due to the EPL. Quite frankly, they do not have it.

One part of the problem seems to be overpayment for middling packages. Last year, Setanta paid £125m pounds for SPL rights through 2014, a vast jump over what they were paying before. Additionally, though splitting the cost with ITV, Setanta bid over £400m for England games and the FA Cup. These are all part of a history of high bids from Setanta, which included a £70M bid for Football League rights after another channel dropped the contract.

Curiously, it seems that these high bids for secondary competitions hampered Setanta when it came to bidding on three-year rights on the EPL last year. EPL rights come in six 23 game packages, of which, in the UK, Sky held four and Setanta held two. In the upcoming package (2010-13), Setanta had to lower their bids, while Sky raised theirs. In the end, only an EU law regarding monopolies allowed Setanta to hold onto a single 23 game package. As it stands, it looks unlikely that the Irish broadcaster will even be around when the 2010-11 season starts.

Quoted figures have Setanta losing up to £100m a year. For years, they have floated on the back of private investment, but that seems to have dried up. Today's meeting, in fact, was supposedly to find ways to drum up cash, since banks have pretty much closed their doors to the channel.

If only they had followed this sage advice from the Americas



The bottom line is that the packages that Setanta currently hold the rights for are likely to be back on the market soon, and likely at a discount rate. Unless, that is, the rumors of ESPN swooping in and buying the channel cheaply are true. There is a delicate balance there for the North American fan. ESPN would likely be attempting to gain a toehold in the UK market, and not doing this for an American audience. Still, if tWWL does take over Setanta, then they would have the North American rights as well, and they wouldn't just let those go unused, would they?

Who knows? And it's a speculative step too far anyway. Setanta, at this time, is still alive. But just know that the vultures are well aware of its location and are just waiting for it to stop moving.