Setanta Sports: On top of their game

Michael O'Rourke and Leonard Ryan started out by screening football in a hall in west London. Now they're bidding for the rights to the Premiership. They explained their rise to Richard Gillis
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Fast forward to 2006 and the two now 40-something entrepreneurs, Michael O'Rourke and Leonard Ryan, are at the headquarters of their company Setanta Sports, situated on the south side of the Liffey river.

Very soon the FA will invite interested parties to bid for the rights to screen live Premiership action from the start of the 2007 season, the end of the current Sky contract. Intervention from the European Commission means Sky will no longer be the only place to watch live top-flight football in the UK. It is another opportunity too good to pass up for O'Rourke and Ryan. "It's very simple: we will bid for the rights when the tenders go out," says Ryan.

By selling niche Irish and British sport to expats in the US, the company has built a global network of channels. But the idea of Setanta as an Irish pub broadcaster, run by a couple of canny local lads, does the organisation a disservice. "Less than 10 per cent of our business comes from Ireland," says O'Rourke.

Setanta Sports turned over £30m last year, with a presence in San Francisco, London, Sydney, Glasgow and Dublin. Ryan says the strategy is based on building channels that will share resources and content. "We can then deliver them to all platforms, TV, internet and mobile," he says.

The company recently won a series of high-profile rights auctions: it beat the BBC to the Scottish Premier League and in Ireland it secured Formula One and 2007 Rugby World Cup rights from under the nose of public broadcaster RTE.

Setanta is also the majority shareholder in NASN, which screens NFL, NBA and baseball in the UK and across Europe and Asia. Last April, it launched a channel in North America, showing football World Cup qualifiers, Champions' League and top-line rugby.

But it is the Premiership that remains the greatest prize. The Premier League's senior management team has spent the past year in fevered negotiations with the EC's Competition Commissioners. The outcome, announced in November, has laid the ground rules for the sale of Premiership screening rights in the UK. The inventory will be broken up for the first time, with six tranches of 23 live games on offer. No one broadcaster will be able to buy all six groups of games.

This effectively ends Sky's monopoly on live Premiership coverage, for which it has paid a premium since the league's inception in 1992. Sky paid £1.024bn for the current three-year contract, which expires at the end of the 2006-7 season.

A feature of this sale, which has potentially far-reaching consequences for how we watch football, is that the rights will be offered on a "media neutral" basis, which means technologies such as broadband and mobile could provide a platform for at least one of the packages of 23 games.

"The price paid may go up this time around," says Ryan, suggesting that questions of media convergence during the next contract will inject dynamism in to this round of talks. "But three years after that (2010) it will come down because the media landscape will have been decided by then. Viewing audiences are fragmenting because of technology. IPTV will impact on choice. It will be like going to a newsagent and choosing which magazine you want from the vast array that are on offer. You pick what you want to watch, when you want to watch it."

Michael O'Rourke says that recent deals concerning the top leagues across Europe may offer a guide to the UK picture. "In Holland an IPTV broadcaster [Versatel] has bought all the rights to the top league," he says. "In Belgium, Belgacom has done likewise. In France everything went to one DTH player (Canal+). Who knows - maybe a bookmaker will bid for the Premiership rights."

He is referring to the situation in Germany, where exclusive international broadcast rights to the Bundesliga were bought by Bet and Win, an internet gambling service.

Those mentioned as contenders for the Premier League have included telecom giant BT, cable operator NTL and France Telecom, owner of Orange.

And there are other, perhaps less obvious, bidders. Top Up TV offers 11 channels, including Setanta Sports, as an additional digital terrestrial service for Freeview subscribers. It has money and expertise on its side. Top Up TV is run by two former Sky Sports executives, David Chance and Ian West, and is part-owned by RTL, the German media group which also owns Five.

A collaboration with Setanta on Premiership rights would be a powerful proposition. But O'Rourke refuses to comment on the suggestion that Setanta would form part of any consortium bid. "We're not going to discuss our strategy in public before the event," he says.

Whatever the configuration of bidders, the interest from these new entrants into the TV sports market promises to play well for the FA Premier League.

The large-screen pub business, upon which it made its name, is less significant now than it was to the overall direction of the company. "Sky is generating the guts of £100m from the pub business," says O'Rourke, "and it all falls to their bottom line. It is not where we are going but we understand the business, which is not easy to do. Apart from ourselves and Sky, I doubt anyone else could do it."

Setanta's board of directors reflects the ambition of its two founders. Over the past two years it has attracted a number of high-profile names from the international sports television business. Steve Bornstein, ex-CEO of ESPN, ex-Sky heavyweight Richard Brooke and Michael Watt, founder of the CSI broadcast agency later sold to Octagon, have all come on board.

The luring of Trevor East, the former Sky deputy managing director and head of ITV Sport, has also created headlines, mainly because he is linked so closely to Sky's Premiership strategy over the past decade.

Whatever the outcome of the next few months, the emergence of Setanta Sports is a significant boost to those with top sports rights to sell. "We don't bid for everything; we're selective about what works for us," says O'Rourke. "There is the odd occasion when we want something very badly and someone else does too, then rights value will go up substantially. But that's not the norm. We don't go out and try to push up the prices for Sky, ITV or the Beeb."