Setanta boss Trevor East is fond of saying Britain's big three sports are football, football and football.

That might raise a hollow laugh among England fans who were unable to watch last night's thrilling 4-1 victory against Croatia because they don't subscribe to Mr East's satellite sports channel. Angry voices have been raised against Setanta over the way it has handled its exclusive rights to World Cup qualifying matches played abroad.

Labour MP John Grogan accused the company of depriving England fans of an inalienable right, commentators have deplored a “sell-out” and when England played Andorra and Croatia fans chanted: “We hate Setanta.” As ­criticism mounted, Setanta offered a sop last night. Highlights of the Croatia game were made available, free but only at 11.30pm and only to viewers with satellite or digital TV.

So what is Mr East up to? As Setanta's director of sport he is the man behind its current strategy. He was poached from Setanta's main rival, Sky Sports, and has a reputation for being highly astute and, in the words of one pundit, “a streetfighter”. Does he think keeping the foreign qualifiers away from most English fans is a smart way to compete with his old firm?

The answer to this is bound up in a struggle every bit as tough as England's attempt to prove it is one of the world's best footballing nations. Setanta is at a crossroads. The next few months may well decide whether it thrives or finds itself fighting to survive.

Setanta was named after an Irish warrior king and sports superhero of Celtic legend. The name was chosen by the two Irishmen who started the company nearly 20 years ago, Michael O'Rourke and Leonard Ryan. They play major roles in the operation today and it's fair to assume no major decisions are made without their input.

O'Rourke and Ryan have become something of a legend themselves. They both attended the exclusive, fee-paying Blackrock College in Dublin — former Irish rugby captain Brian O'Driscoll and Bob Geldof are ex-alumni — and in 1990 were living and working in ­London.

Italia '90 kicked off that ­summer and O'Rourke and Ryan learned to their chagrin that Ireland's crucial match against Holland was not being screened in Britain.

They telephoned Fifa, football's governing body, and the BBC. What did they have to do to get television rights? The short answer was: stump up some cash. They did and hired the Top Hat, an Irish dance hall in Ealing, and showed the Ireland-Holland game on a big screen. More than 1,000 Ireland fans paid £10 each to watch.
O'Rourke and Ryan lost money on the deal, although they, too, saw the game. But that faded into insignificance when they realised that what the exercise proved was that there was a demand for Irish sport in London's large Irish ­community.

So, Setanta was born, first as a small operation concentrating on mainly Gaelic football and hurling, beamed into 1,500 pubs. Then it began showing English and Scottish football in Ireland and countries across the world, drawing in English expat audiences. Rod ­Stewart, in Los Angeles, was an early client. The breakthrough came in 2004 when Setanta acquired rights to broadcast English football in the UK.

Setanta moved into the big league two years later when it paid £392 million for a package of rights to certain English Premier League matches. For the first time, the satellite channel was being seen as a rival to Sky. There were cheers in Dublin's business community, but O'Rourke and Ryan, both in their mid-40s, reacted with the sang froid for which they have become famous.
Shortly after the news was announced Ryan was spotted mowing the lawn at his house in the smart Ranelagh suburb near Dublin city centre.

O'Rourke, always known as Mickey, went to the Railway Union sports ground near his home in south Dublin and played a game of five-a-side soccer. A devoted football fan, he has a framed Chelsea shirt in his home, signed by the team.
In the run-up to the 2010 qualifiers, Setanta negotiated with the foreign football authorities hosting the matches England plays abroad, including those in the current round. They managed to secure exclusive deals but at what price? Setanta paid £5 million for rights to broadcast the match between ­England and Andorra.

Yet the viewing audience was estimated at around one million. Even if unaudited numbers watching in pubs are added, the figure still probably means Setanta paid close to £5 for every viewer it captured.

Setanta also paid £5 million to the Croatian FA for exclusive rights to show last night's game. It might be thought the company would be keen to lay off some of this considerable outlay but when ITV and BBC negotiated for a package of highlights Setanta turned them down.

The company says the free-to-air broadcasters offered too little. It has been suggested ITV offered £500,000 at one point but this was not confirmed. The BBC and ITV said they thought they were being asked for too much, but privately sources inside both organisations said they formed the view Setanta simply didn't want to sell but to hang on to its exclusivity. This raises an intriguing question: why would Setanta pass up an opportunity to pull in large sums of cash? After all, a deal to show edited highlights is unlikely to damage its exclusive rights very much, as the late decision to offer a package last night proved.

The answer lies in Setanta's longer-term strategy. Industry experts believe Setanta is going for broke in its bid to be considered a serious rival to Sky. “It's all about profile,” said one. “Premier League games and big qualifying matches in the World Cup 2010 raise their profile considerably.”

The question of profile is crucial because Setanta believes that only by capturing the high ground of big sporting events can it expand its subscriber base. And this, it is thought, is the key to its future. Some might say it is the key to its survival.

Setanta loses money. It is a private company and is notoriously coy about numbers but its spokesman told the Standard it has more than one million subscribers paying its premium rates of between £10.99 and £12.99 a month and around two million more who receive the service through other ­providers including Virgin Media and BT Vision. As Michael O'Rourke has acknowledged, this is less than half Sky's total of subscribers. He says his company is an additional service to Sky, and that it will never be as big.

But industry sources say if Setanta is to prosper — or just break even — it has to be bigger than it is. This means pulling in new subscribers and quickly.

By next April Setanta wants to increase its subscriber base to four million. Of these, it wants one and a half million to be premium customers. The lure of England qualifying games played abroad, such as the Croatia match, is seen as crucial to bringing in these new people.
It was noted last night that Setanta showed a few moments of the Zagreb game free before urging viewers to take out a subscription. One television pundit described this as “probably a carrot upon which many bit”.

Setanta will need many more. Industry experts believe its target of one and a half million premium viewers by next April will be hard to reach. The strategy over the England qualifiers is already looking like a shot in the foot and other opportunities to raise its customer base by nearly half a million in the next seven or eight months are unlikely to be many.

O'Rourke and Ryan are characteristically relaxed and upbeat. They are said to take the view that Setanta is comfortably on course to break even next year. But what of their partners in the business? The two founders are believed to hold 10 per cent each in the company. Other Irish shareholders have dropped out over the years and the majority owners now are Goldman Sachs, Doughty Hanson and Balderton, Europe's biggest venture capital group specialising in the technology sector.

The problem for these shareholders is that Setanta is currently costing them money and, if it doesn't reach its break-even targets, could start costing them a lot more. One estimate suggests Setanta may need £150 million before next April. By then, its Premier League rights deal will be close to renegotiation. It cost £392 million last time. Where will the money come from?
These thoughts have occurred to Setanta's shareholders. Earlier this year Goldman Sachs was quietly sounding out potential purchasers for the company. Some documentation was circulated and it looked, for a time, as if an auction might get started. But it stalled. There was interest, according to one source familiar with the discussions but the problem was the asking price. Goldman Sachs was apparently talking in terms of £1 billion, a figure considered unrealistic at a time of money shortages.

So plans for a sale, which were never confirmed, were dropped and the drive to increase subscribers was stepped up. The exclusive deals on the foreign qualifiers was an important part of this but there is now a view that the strategy has backfired. The last thing Setanta wanted was to be seen as the bogeyman of England's World Cup campaign.

“Setanta always wanted as many football fans as possible to be able to watch the Croatia-England match,” Trevor East said, after the hurried efforts to offer last night's highlights package. That, of course, is true. But who believes he wanted them to watch it for free?

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