Profile: Setanta Sports is slowly but surely picking off juicy bites of sports coverage. Some shrewd manoeuvres could help it inflict real pain on RTÉ, writes Emmet Oliver
It appears there are certain items any self respecting middle-class Dublin home can't be without these days. Whether it's an Ikea sofa, a Graham Knuttel painting or an iPod, there are some things you just have to have. Apparently.
For your teenage son, access or a subscription to Setanta sports fulfils the same function. And according to its detractors, it is highly likely to be only middle-class Dublin homes signing up - at least for now.
Since announcing its decision to broadcast Leinster Schools rugby a few months ago, Setanta Sports has suddenly developed a certain cachet in leafy Dublin suburbs and throughout the east coast.
This impression is probably a little unfair on the station. It does offer the following sports: golf, boxing, Formula One racing, Irish soccer, English premiership and Celtic League rugby.
But the decision to broadcast the Leinster schools competition moved the station from the sports pages to the news pages and on to radio phone-in shows.
Accused by some of elitism (many of the schools in the Leinster competition are fee-paying), the decision was regarded by others as clever and commercially astute.
"There are big crowds at Donnybrook every week for these matches, whether people like it or not. It's never going to be a ratings buster for them, but in its own small way it should drive their subscription numbers," said one advertising source this week.
The founders and majority shareholders in the station, Leonard Ryan and Michael O'Rourke, as former Blackrock College boys, know more than most the power of the tournament.
So far, advertisers are quite keen on the channel. Tony Newby, broadcast director with ad agency Universal McCann said yesterday: "With commercial male audiences becoming increasingly hard to find over the past number of months the introduction of a new sports channel can only be a good thing for those advertisers targeting men. Although Setanta's ratings will not be particularly high while it is still finding its feet, if it keeps introducing programming of the calibre of Formula One it could soon become an important part of a lot of advertisers' schedules."
Michael Quilty, another senior media buyer, said male-orientated brands will flock to the station and he has already booked space clients.
In essence, what is interesting about Setanta Sports is its potential to harm RTÉ in the long term.
As things stand this might seem a laughable idea. RTÉ dominates the television sports market in Ireland. It has the rights to Six Nations rugby, the All-Ireland Championships, Irish soccer internationals and even some Saturday afternoon English Premiership matches. Consequently, advertisers will always weigh their budgets heavily in favour of the State-owned broadcaster. But what about Setanta's chances of inflicting some damage around the fringes? Setanta has already gained entrance to the homes of ABC1 Dublin families via its schools rugby coverage, but GAA rights are the holy grail for the channel. The rights to all GAA matches are currently up for negotiation and sources believe Setanta may get a bundle of rights, even if RTÉ is likely to get the lion's share. "I think if they get a decent slice of the GAA action it would really make them serious players," said one sports figure yesterday.
However, its ability to damage RTÉ is limited. Two years ago the Government decided that certain "national" sporting events, such as the All-Ireland final and semi finals, must remain free-to-air. However, earlier rounds of that championship are up for grabs, as is the National League, so Setanta might like to swoop on those.
The decision last year of RTÉ head of sport, Niall Cogley, to jump ship and join Setanta sent shockwaves through RTÉ Sport. Meanwhile Ryan and O'Rourke have their eye on a larger prize, which is to make the Setanta group a major player in the world of sports rights and pay-per-view television.
It is a long way from the dingy Irish pubs in London where their business began at the time of Italia '90. The two men were working in London (mainly on music projects) and discovered Irish fans could not access the World Cup games.
Some time ago, Ryan recalled how they stumbled upon the opportunity. "We hired the Irish club in Eaton Square and we were charging people a fiver to watch the Irish games. We had screens in all the rooms and about 500 or 600 came to watch it. ITV and BBC did not show the Ireland-Holland game, so we made a few phone calls and we managed to plámás access to the rights for nothing. We had to take it off a European Broadcasting feed and we paid a lot of money to do that."
He said the response to this event was amazing. "It was then we realised there was a group of displaced ex-pats living in England who obviously wanted to see this game and maybe there was more to it," he said.
While both men look back on this period fondly, they are conscious that being associated with that sort of amateurism may no longer be to their advantage. Ryan, in a rare interview, told this reporter: "A lot of people have this perception of Setanta that it's just a bunch of bars . . . with people queuing up with dirty fivers paying for GAA matches, but we are a long way from that".
Anyone trying to compete in an industry populated by behemoths such as BSkyB, Fox and ESPN needs to be alert, flexible and, if possible, on good terms with others in the sports rights industry. Ryan and O'Rourke have maintained relatively cordial relations with the likes of Sky and RTÉ.
While both men appear to have the skills needed to promote the station (O'Rourke was once UCD's Students' Union entertainments officer), they are notoriously shy when it comes to media interviews, particularly when the question of finance arises.
According to the Irish Companies Registration Office there are a staggering 17 companies associated with Ryan and O'Rourke, with the Irish sports channel just one of those registered. Getting a fix on the ultimate profitability of the Setanta companies has eluded everyone so far and Ryan and O'Rourke appear to derive a vicarious pleasure from frustrating financial journalists.
For example, shortly before Christmas AIG, a giant US insurance company, took a minority stake in Setanta Sports Holdings Ltd. Ryan and O'Rourke are not telling anyone how much the stake was sold for, although they claim all the proceeds are being reinvested in the business. As shareholders in a private company the two men are perfectly entitled to adopt such a low-key approach, but the lack of openness about their financial performance has resulted in a certain scepticism about the company in some quarters.
The decision last February to buy the rights to Scottish Premier League football for about €50 million has increased this. "They have done well and have really come out of nowhere. But spending sums like that means they must have access to significant capital," said a rival TV executive. Scottish media reports suggest subscriber numbers to their Scottish football channel amount to between 80,000 and 100,000.
The company's bank, Anglo Irish Bank, is a strong supporter of medium sized businesses such as Setanta and doesn't back too many losers. There is also a relationship with Michael Watt, the founder of the international sports rights negotiation company Octagon CSI. But how much Watt may have invested in the various Setanta companies has never been disclosed.
As one observer put it: "whatever they say to these guys, it seems to work". The Irish media were taken aback in October 2002 when the world's fifth richest man - Paul Allen, a co-founder of Microsoft - invested €10 million in their North American Sports Network (NASN). This is a particularly clever idea, providing American sports such as basketball and baseball to ex-pats living in Europe. The service is run on a shoestring, using second-hand equipment bought from ITV Digital, the company that collapsed spectacularly in 2002. While originally marketed to Americans living in Britain and Germany, it appears Europeans are also prepared to shell out to watch American sports.
Success like that means the Irish sports channel must also be taken seriously.The names of John Magnier and Dermot Desmond surface regularly in speculation about the backers, but they are fiercely denied by Setanta. Denis O'Brien is also mentioned as being a close ally of the two. There is some truth in this as, for example, both O'Brien and Setanta have shareholdings in Dublin radio station NewsTalk 106. They also invested together in the online broadcasting company Servecast.
With so many projects ongoing, there is a danger the two men could spread themselves too thinly. But they are aware of this and last year they said they intended to rationalise their operations. Already their production arm, which used to make programmes such as Breaking Ball, has been sold off in a management buyout. Some of the smaller outposts of their mini-empire may soon follow. When asked what the future held for them, Ryan simply replied: "It could get very interesting."
It certainly could. The two men are reported to be potential bidders for the cable company ntl Ireland, which provides television services to 340,000 homes in Dublin, Galway and Waterford. The company is being sold by Goldman Sachs and is likely to fetch a price of between €200 million and €230 million.
The firm probably could not finance a deal of this scale on its own but it may be able to team up with a larger bidder, possibly AIG.
The Setanta File
What is it? An Irish television sports channel, available with the ntl package, and for €99 to customers of Sky Digital and Chorus
Why is it in the news? This week it launched its new broadcasting schedule including exclusive rights to Formula One coverage in the Republic
Founders and shareholders: Entrepreneurs Leonard Ryan and Michael O'Rourke. Last year former head of RTÉ Sport, Niall Cogley, joined as chief executive of Setanta Sports
Most likely to broadcast: Rugby, premiership football and - it hopes - one day, top-flight GAA action
Least likely to broadcast: The world shuffleboard championships