When your business model is under threat, you have no choice but to change it. According to several reports, sports broadcaster Setanta is considering a radical switch in strategy from a customer-facing TV subscriptions to wholesale content distribution. FT.com reports that the company, which owns English Premier League TV rights as well as Scottish football and boxing, is considering wholesaling its content to pay TV rival BSkyB (NYSE: BSY) and possibly BT’s IPTV service BT (NYSE: BT) Vision.
A big shadow was cast over the company’s business model after it lost half its English Premier League rights for the 2010-11 season — it will show 23 instead of its current 46 games — after being out-bidded by Sky and now Theherald.co.uk reports that the company has defaulted on £3 million in payments to the Scottish Premier League, putting its five-year deal north of the border in serious doubt.
Setanta’s weakened rights portfolio prompted PE firm Doughty Hanson, which owned 20 percent of the company, and Goldman Sachs, which owned five percent, to both write off their stakes in the company. Setanta is thought to be losing some £100 million a year and Claire Ender of Enders Analysis estimates that the wholesale option is “the one escape route from Setanta’s predicament” but FT.com reports that talks between Setanta and Sky have already foundered over whether the former should be paid in advance.
But what about online? Setanta still owns the rights to 23 top flight football matches that fans will want to watch — couldn’t it broadcast them itself online, perhaps on a PPV basis? The company already simulcasts its coverage online through http://setanta-i.com/ — that’s free for subscribers or £79.99 a year or £7.99 a month for the rest of us. The Competition Commission introduced specific rules to prevent Sky getting it hands on all EPL games — but if Jeremy Darroch’s company does manage to find a loophole through that, is there any hope that the world’s richest sporting league will have an accessible, affordable, online consumer product when linear TV remains so profitable for the dominant player?
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