"That's Asia and that's Kazakhstan on that screen there," says Mickey O'Rourke, co-founder and owner of Setanta Sports, pointing at various monitors as we take a whistle-stop tour of the control rooms for the multitude of channels and feeds operated by the Irish broadcaster.
There's a feed into Newstalk, too, where Pat Kenny can be seen hosting his morning radio show. "That feed is for Off the Ball, which we stream at night," O'Rourke adds.
The Newry-born entrepreneur is a director in the national radio station and a shareholder through Setanta Media Holdings’ stake in the business.
There’s a hum of contentment at Broadcasting House, as we walk through Setanta’s busy base and settle in O’Rourke’s corner office, which has a nice view across the Liffey. And why shouldn’t there be?
Setanta has had a strong couple of years since signing a deal in 2013 with BT to bundle the then fledgling sports channels of the British telco with its two Setanta channels for an Irish audience.
BT had won two packs of live English Premier League football rights and partnered with Setanta to offer a bundled pack of five channels in Ireland. Audiences here can get Setanta Ireland and Setanta Sports 1, BT 1 and 2 and ESPN for €21.99 a month or €199 a year.
O'Rourke describes it as a "game changer" for a company that almost went bust in 2009 after its UK business collapsed under the weight of its debts, having sought to take on Rupert Murdoch's Sky Sports in the pay TV game.
“Business is very good,” O’Rourke beams. “Every revenue stream is growing strongly. We invested heavily in 2013 with the BT content and the ESPN channel and a whole host of other content like the Irish soccer internationals and the [English] FA Cup. It started bearing fruit in 2014 and has continued in 2015.
“We’re also beginning to benefit from the return of the Irish economy. We are a consumer-facing brand and it’s been a tough couple of years for our subscribers. so the fact that the economy is turning is helping us.”
Subscriber secrecy
There’s a long-held tradition at Setanta to be tightlipped about its financial details and subscriber numbers. A web of companies, some in Ireland and some abroad, make it difficult to get a clear picture of how the business is performing.
After a bit of cajoling, O’Rourke says revenues for the “whole Irish business” are circa €30 million.
“We probably grew by 20 per cent in 2014 over 2013. Maybe 25 per cent in revenue. It’s double-digit growth,” he adds.
Subscriber numbers?
"That's another number we don't reveal," he says with a smile. "We say it's over 100,000 subs in the Republic. I'm giving you a lot of information here. I don't think I've ever given that number out. It's a combination of [customers] on Sky and UPC [platforms]. Well over 100,000.
"We've over two million viewers who would have access to Setanta Ireland through UPC [basic TV package]. We'll see that number grow as Eircom and now Vodafone grow their TV offers."
The company made a “small profit” in 2014 and “we’ll do the same” this year in spite of a €4 million investment in the start of a high-definition channel in August, the launch of a Setanta player playback service on broadband, and the acquisition of live rights to Uefa’s Champions League and Europa League competitions for three years from next season.
Pay rises
He’s predicting a double-digit rise in revenues for this year, too. And the benefits are beginning to trickle down to employees – Setanta has 125 full-time staff and 40-50 part-timers in Dublin.
Late last year, O’Rourke gave all staff shares in the business, and pay rises of between 2 and 5 per cent were awarded in December.
“Basically, everyone in the company has shares,” he says. “It’s nice to do although obviously it doesn’t necessarily mean anything until we start paying dividends. But it’s good, you know. It means they can share in the growth of the business.”
On when a dividend might be paid, O’Rourke said “2017 anyway but maybe next year” with a strong wind at its back.
O’Rourke rattles off a list of box office sports that should draw viewers in over the coming months. There’s the business end of the Premier League and FA Cup competitions in England, the Irish soccer team’s glamour home friendly against England in early June, Leinster’s European Rugby Champions Cup quarter-final against Bath, and coverage of Conor McGregor’s quest for a UFC title.
It’s all a far cry from the dark days of 2009 when Setanta almost folded after a bold bid to take on Murdoch’s Sky Sports in its own backyard.
With backing from heavyweight financial investors such as Balderton Capital, Doughty Hanson and Goldman Sachs, Setanta secured two packs of live TV Premier League rights in England to headline an offering that also included Scottish Premier League soccer, PGA golf in the United States and a raft of other sports.
“In hindsight, we bought the rights very cheaply,” O’Rourke says. “We paid about £130 million [a season] for 46 games, or roughly £2.8 million per game. Sky are paying about £11 million per game now and BT about £7.6 million.
“And they were good games we had. Good kick-off times. Saturday at 5.30pm. We had a great team of people. We were the first to bring Premier League to [UK digital terrestrial service] Freeview. So you could pay £9.99 and see the Premier League. That allowed 15 or 16 million people to have access to Premier League. We sold almost 400,000 boxes.
“We probably had, between satellite, cable and Freeview, somewhere around 3.5 million [households]. We did a deal with [cable TV operator] Virgin where 1.8 million households were able to see the Premier League for free. It was a unique deal for them and grew their base.”
O’Rourke says Setanta was “pretty close” to breakeven in the UK but it all came crashing down in 2009 after it lost one of its Premier League packs to Sky when the rights came up for renewal.
It still had one season of its original deal to run but couldn’t secure the necessary funding to keep the show on the road.
“We simply hit a liquidity gap,” he says. “We needed about £40 million. But there was no money available for anyone. We obviously had big investors . . . but they were all experiencing their own challenges.”
Setanta’s collapse in the UK cost O’Rourke “a lot” of money. “That’s life, you know. We weren’t the only ones to have invested money in Ireland and lost out. We’ve done very well since.”
He has “no issues with Sky”, even though its pinching of one of Setanta’s Premier League packs probably hastened the demise of Setanta in the UK.
Separately, the Irish business was just "days away" from folding and wouldn't have survived without the support of Irish concert promoter Denis Desmond – a "great partner and a good guy . . . very supportive".
"We [O'Rourke and his co-founders Leonard Ryan and Mark O'Meara] had huge challenges to keep the business going. We didn't even have any income for the first couple of months because we couldn't take money out of the accounts. Our staff and suppliers were very patient and we got through it."
O’Rourke says the net churn in customers at the time was “probably 30 or 40 per cent” when “normally you’d be growing”.
"We had to massively reduce our costs. Our salaries went down by 30 per cent at the top end to 2 per cent at the bottom. We reduced every bit of cost. We're now one of the low-cost producers in the business. It would cost us about one-third to do an event of what it would cost Sky or RTÉ. That's something we've had to learn."
Newry native
It could all have been so different for O’Rourke. Born in Newry, his family moved to Killiney in Dublin when he was nine. He was schooled in Blackrock College before doing commerce in UCD and a masters in entrepreneurship.
In 1989, O’Rourke moved to London to take up a post as a graduate trainee with NatWest bank, where he spent two years.
While in London, he met Ryan at a party and the two struck up a relationship that endures. In 1990, they organised a big-screen showing of the Ireland-England match at the Italia ’90 World Cup in a London pub for their friends.
They then cajoled the BBC into giving them a feed to show the Ireland-Netherlands game for “around two grand”, as this decisive group match wasn’t going to be on TV in the UK.
“It cost so much to put up a projector and to hire a venue, that we didn’t actually make any money on it,” he recalls. “But we discovered there was a huge appetite from the Irish community to see live sport.”
GAA rights followed and, after a couple of years double-jobbing in a family business in Newry, O’Rourke committed himself full-time to what is now the Setanta business.
Ryan, O’Meara and Desmond have since sold their holdings to O’Rourke, who is now flying solo.
Having rebuilt the Irish business, he has since sold off some of its overseas offshoots at a profit. Just last week the Competition and Consumer Protection Commission here cleared the sale of its Asia business to John Malone's Discovery Networks. O'Rourke, Ryan and O'Meara continue to work together through an investment vehicle called Danu Capital Partners.
“We’ve invested in a couple of businesses. West Cork Distillers – a good whiskey distillery in Skibbereen that is doing well. We’ve also invested in a company called Rain Safe, which takes rain water and uses a combination of filters and UV light to ensure it’s clean and reusable. Its very exciting.”
Dublin pubs
Danu is also spending about €15 million on acquiring four pubs that were part of the Capital Bars group – Dragon, the George, Howl at the Moon and Cafe en Seine, although this prime Dawson Street venue is subject to a tussle with landlord
Louis Fitzgerald
.
“They’re all slightly different,” he explains. “They’re central-Dublin-based, we like that and we have a view that the economy is on the up and that tourism is on the up.
“We’re completely gutting and refurbing the Dragon [at a cost of €750,000]. We’re going to slightly upgrade the George. It works really well.
“When we take hold of Cafe en Seine, assuming we do because we’re arguing with the landlord about taking ownership, the idea is to upgrade that as well.
“For Howl . . . that needs a massive refurb.”
The Irish business and a sister channel in Eur-Asia are the remaining parts of Setanta owned by O’Rourke.
For all its strengths, Setanta is a small fish in the very large pond of pay-sports broadcasting.
Having been in the broadcasting business in one form or other since 1990, Setanta is very “personal” to O’Rourke. There’s no formal exit strategy, he says, but he wouldn’t rule out a deal with a bigger player at some point in the future.
“We have a five-year plan to continually improve the business . . . we think we’ve got a sustainable portfolio of content. But you’d never say never.
“There’s tremendous logic. Content is king . . . Sport is one of the great differentiators for platforms and Sky has shown how well it has worked for them and sport has transformed BT’s business.
“You’d never say that Setanta wouldn’t be under a UPC, Vodafone or Eircom but, at the same time, we run the business to live today.”
