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Setanta scores

BSkyB drops soccer ball in Blighty

LONDON — As British webheads assess the significance of live rights to English Premier League soccer being sold for a massive £1.7 billion ($3.2 billion) — more than the ad revenue of Blighty’s biggest commercial network, ITV1 — chances are they will conclude that the real winner in the rights race was Dublin-based Setanta Sports.

Of the six 23-game packages up for grabs, Setanta, formed in 1992 by Irish entrepreneurs Michael O’Rourke and Leonard Ryan, bought two for $729 million.

The remaining four packages went to satcaster BSkyB, whose 14-year-old stranglehold on live coverage of Premier League matches is over.

BSkyB paid $2.4 billion, compared with $1.9 billion for exclusive live coverage three years ago, a 65% hike.

By winning part of the crown jewels of British sport for three years, beginning August 2007, Setanta will be able to beef up its sports offering that in Blighty runs to seven channels available on satellite and cable.

Also expect to see live Premier League games on Top Up TV, the U.K. subscription service on digital terrestrial platform Freeview. “It’s a steep change for Setanta,” says Paul Richards, a media analyst at London-based investment bank Numis Securities. “These are the most important rights in U.K. TV across any genre. Setanta is now a very significant player in the pay TV sports business.”

BSkyB was expected to win five of the six packages under rules introduced by the European Commission to end BSkyB’s monopoly.

Setanta’s success in the soccer rights battle is another sign that the U.K.’s pay TV market is finally opening up following years of dominance by BSkyB.

“BSkyB has been one of the worst performers on the London stock exchange over the last two to three years because of increased competition,” says Richards.

First it was the successful growth of U.K. digital terrestrial platform, Freeview — whose popularity is expected to overtake Sky’s this year — that concerned investors.

Other threats are the newly merged NTL/Telewest cable operator, which announced last week that it will rebrand itself as Virgin TV early in 2007 following its purchase of Virgin Mobile for $1.8 billion; the imminent launch of British Telecom’s video-on-demand offering, BT Vision; and now the arrival of a real competitor in the pay TV sports market.

“Of course BSkyB remains the driving force in U.K. pay TV,” says Richards. “They are a formidable business in terms of scale and they are not exactly taking a back seat in technological developments.”

Sky HD launches May 22 as Blighty’s first mass-market high-definition proposition.

“Winning four of the six packages was an excellent result for Sky but they overpaid,” says an industry expert. “NTL came away empty-handed but they forced up the price and the upshot was Sky paying more money for less content. ”

Numis estimates that as a result BSkyB will incur extra costs of $180.4 million a year and lose $65 million in revenues because it will have to close its Prem Plus pay-per-view service because it no longer holds all match rights.

Significantly, four days following the news that BSkyB and Setanta had bid successfully against NTL and free-to-air terrestrial Channel 4 for the soccer, the two announced they had collaborated on a lucrative deal that gives U.K. pubs and clubs all live Premier League games.

Meanwhile those who came away empty-handed from the bidding for live rights can look forward to more maneuvering as U.K. media owners prepare to make their pitches for Premier League highlights and mobile rights.

Only those with deep pockets need apply.

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