Setanta, the pay TV broadcaster that has poured hundreds of millions into sport over the past three years, was close to collapse tonight after the Premier League terminated its £392m contract to show live matches with immediate effect.
The move leaves the Premier League urgently looking for a new broadcast partner and could spell financial ruin for several Scottish Premier League clubs. Premier Rugby, PGA Tour golf, the Blue Square Premier and other rights holders will also be hard hit if it goes under.
The Premier League had given Setanta until 5pm today to come up with £10m under a payment plan agreed with the broadcaster to meet an outstanding £35m instalment on its rights to 46 live Premier League matches per season. A rescue package agreed in principle last week with the Top Up TV owner Access Industries, funded by the Russian billionaire Leonard Blavatnik, had raised hopes that the Premier League deal could be saved.
But, as negotiations that had been taking place around the clock for the past week dragged on into the evening, and the Premier League refused Setanta's requests for a further 72-hour extension, it became clear the broadcaster was going to lose its race against time.
"The Premier League has been working with Setanta for some time to help them continue as the broadcaster of 46 UK Live Matches for the 2009/10 season," it said in a statement. "The Premier League, in agreement with Setanta, stipulated that certain contractual requirements had to be met on or before Friday 19 June 2009 to allow the preparations for the 2009/10 season to continue unaffected. It is with considerable regret that we announce that Setanta has been unable to meet their obligations. As such the existing licence agreement between us has been terminated with immediate effect."
Setanta sources said the Premier League had refused its requests for more time to complete a rescue deal, which would have left the company on a firmer footing. The Premier League could face the wrath of other rights holders if they believe it has hastened Setanta's demise.
The FA will also be forced to look for a new broadcasting partner if Setanta, with which it has a £150m contract, collapses. It is understood that ITV, which paid £275m for its share of the deal but has since written down the value, is obliged to pick up England's away matches at £2m apiece. The FA chief executive, Ian Watmore, said tonight it was "understandably very disappointed with the news".
He added: "We have worked well with Setanta's management and potential new investors in the last week and had reached a solution in principle that would have allowed them to meet their contractual requirements with the FA and strengthen our strategic partnership. However, they made it clear throughout that this was dependent on reaching agreement with the FAPL. We now await developments but remain confident of the attractiveness of our broadcast rights going forward."
The future of Setanta, backed by venture capitalists in an ambitious attempt to take on Sky, has been in doubt since February, when it lost half of its 46 live Premier League matches per season from 2010 after under-bidding for a package. As revealed by the Guardian, that sparked a crisis of confidence among investors that it would be unable to reach its break-even target of 1.9m premium subscribers and sparked complex negotiations over a wholesale restructuring.ESPN and Sky are among those expected to bid for the Premier League rights, with the quick-fire auction set to close on Monday. Under a deal agreed in 2005 with European competition regulators, Sky can hold no more than five of the six packages of 23 games on offer.
The pay TV giant, which already broadcasts 92 matches under a £1.3bn deal and has first pick of the best games, could win 23 of the 46 games suddenly on offer, leaving Disney-owned ESPN to pick up the rest. Free to air broadcasters are highly unlikely to bid.
A source at Setanta said tonight that the rescue deal, under which Blavatnik had promised £20m for a 51% stake as part of a plan to restructure the broadcaster that would have also included another £20m in fresh investment and £50m from existing venture capital backers, had not collapsed. But at 6pm yesterday the Premier League decided it could wait no longer.
It is thought that talks between Access and Setanta are continuing but the terms of its offer will now change. "They are looking at what can be salvaged from this situation," the source said.
An Access Industries spokesman said: "Access believed that this proposal [to save Setanta] could potentially have secured the future of the broadcaster for its customers, employees and for football, provided certain conditions required to put the business on a long-term viable footing were met.
"Regrettably, despite intensive efforts on all sides over the past few days, and despite significant progress in a number of areas, there remain a number of issues which we have been unable to resolve within the time available."
Lex Gold, executive chairman of the Scottish Premier League, said this evening: "We are still locked in discussions with Setanta.
"Understandably, these discussions are complex and must remain confidential at this stage. We expect these to conclude early next week."
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