Setanta founders race against the clock

Thursday, June 11 2009, 09:32 BST

By James Welsh

Setanta founders Michel O'Rourke and Leonard Ryan are racing against the clock to put together a rescue package for the pay TV broadcaster before a 30m payment to the Premier League becomes due next Monday.

A funding gap of 100m has opened in its coffers and existing investors Doughty Hanson, Balderton Capital and the private equity arm of Goldman Sachs have offered a maximum of 50m.

In seeking to raise the other half, Setanta has considered two options: firstly, wholesaling its content to Sky for a 50m advance, and secondly, selling an equity stake to another broadcaster such as ESPN. Neither option has been taken up, with Sky chief executive Jeremy Darroch saying Sky's job "is not to fund other companies".

Press reports now indicate that O'Rourke and Ryan are now considering selling off Setanta's profitable operations in the United States and Ireland as part of a plan to avoid going into administration. Only yesterday, Setanta US said it was "business as usual" at the American office. Reports indicate the founders are also trying to put together a management buyout that would see the firm's existing backers having to write off much of the 500m they have put in - but possibly losing less than if Setanta had to go into administration. Hopes for rights contracts to be renegotiated at a lower price have largely failed to materialise.

It is no longer possible to become a new subscriber to Setanta Sports; the company pulled direct retail sales earlier this week, and BT Vision stopped selling Setanta to its customers yesterday. Virgin Media, which offers Setanta free of charge to XL TV customers and at a monthly rate for other subscribers, said it is "monitoring" the situation. Virgin is also a partner in Setanta Sports News, which is produced by ITN. At present, all Setanta channels are continuing to broadcast.