Virgin and Setanta team up to make Premiership football challenge to Sky
23/07/2007 |
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Setanta Sports, the sports broadcaster, has won access to 1.4 million Virgin Media customers after a tie-up with the cable provider that will give premium subscribers free access to 46 Premiership games a season.
The tie-up is a significant boost to Setanta’s reach – for the past few months, it had said that it had signed only “more than 200,000” customers after paying £392 million for a slice of the Premier League live rights over three years.
It is also a critical step to building a profitable business for Setanta. Virgin Media is paying “a wholesale price” to its partner and is giving the games away to anybody willing to take on its £38.50-a-month “XL” package.
In May last year Setanta’s founders estimated that they needed to win one million customers to break even over the three years that it owns the Premier League rights. However, since then Setanta has bought rights to show FA Cup games from 2008-09 for £150 million over four years.
Setanta is also receiving less money per customer than it had hoped; while it takes £9.99 per Sky and Freeview customer, Virgin is paying “less than that” for each of its 1.4 million customers on its XL package.
Setanta was set up in 1990 by Leonard Ryan and Michael O’Rourke, who have expanded the business in recent years. The company, backed by Balderton Capital, Goldman Sachs, Doughty Hanson and others, is widely expected to be sold once its business model is established.
Malcolm Wall, director of content at Virgin Media, said that he “did not believe that the tie-up will be loss leader” for the cable group. He said that Virgin expected to make money as existing customers upgrade to the XL tariff and added that he “hoped to gain customers from Sky and Freeview”.
Virgin Media also promised that it would not increase the price of its £38.50 package by more than the rate of inflation and that the deal would last for the next three seasons, until Setanta’s Premier League contract expires. BSkyB, 39.1 per cent owned by News Corporation, parent company of The Times, holds the rights to 92 live Premiership games.
Setanta is also available via Sky and Freeview for £9.99 a month and on other Virgin Media tariffs for £8 a month. In the past month, Setanta slashed the price of the Sky package from £14.99, implying that it was trying to win over subscribers.
The cable company has been under pressure after a spat with Sky, in which Sky One, Sky News and Sky Sports News were withdrawn from Virgin Media after a row over pricing. That prompted a number of customers, estimated by Virgin to be 40,000, to switch to its satellite rival.
Asked if Virgin Media had any interest in acquiring Setanta, Mr Wall said “they are backed by private equity”, implying that too high a price was demanded. Virgin Media is itself a bid target, after Carlyle, the venture capital group, made an indicative offer. Other groups are circling it.
(Source: Timesonline.co.uk)
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