TV Rights Deal

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TV Rights Deal

Post by Redszone on Thu Mar 03, 2011 1:51 pm

A bidding war by free-to-air networks for rugby league rights could double the code's existing broadcasting income of $100 million a year, bringing it in line with the AFL's aim of being a billion-dollar sport.

One very senior Channel Seven executive, expressing disenchantment with AFL negotiations, said: ''We've got the money for rugby league and we will pay.''

The Kerry Stokes-owned network recently consolidated with other media and machinery arms of his business empire, ensuring Seven has the cash to bid for rugby league, which it sees as a superior programming alternative in the fast-growing Brisbane and Queensland markets.

''We're going for rugby league,'' the network boss said. ''We've got so much money now.''

Yesterday's appointment of James Warburton, Seven's former sales director, as Ten's CEO will also accelerate the other AFL network's move into rugby league bidding. Warburton needs to kick an immediate goal and knows he can deliver with NRL. Furthermore, his defection incensed Seven CEO David Leckie, who was having a 9am breakfast with Ten's acting chief Lachlan Murdoch when Stokes called with news of the appointment.

It is likely Murdoch will be elevated to executive chairman of Ten, with one NRL boss saying: ''The best thing about Lachlan now being in charge at Ten is that he hates AFL.''

Seven knows Nine's existing first-and-last rights offer contract with the NRL makes it vulnerable to losing rugby league. If Nine's first offer to the NRL is exceeded by 20 per cent by a rival network, Nine loses its right to match it. For this reason, Nine is retaining most of its war chest for NRL.

''Rugby league is ours to lose but we won't lose it,'' is the central message of Nine boss David Gyngell.

However, a cashed-up Seven is seeking savings on AFL and additional cash for NRL. ''We're keeping some of our powder dry for rugby league,'' that Seven boss said.

Seven has already indicated it will refuse to pay the money the AFL expects in order to realise its ambition of a five-year, $1b deal, particularly with 42 per cent of its income now deriving from the Sydney market. Foxtel, desperate to sell subscriptions in the southern states, which lag behind NSW and Queensland, is seeking seven live AFL games per week a season.

Seven and Ten will televise one AFL game each exclusively on Friday and Saturday nights respectively to satisfy the federal government's anti-siphoning requirements, while possibly sharing another one game each with Foxtel. While Foxtel might be willing to double the $53m it now pays for four AFL games, to possibly $100m for seven games, it is highly unlikely Seven/Ten will pay the same $90m they now outlay for four games.

The two free-to-air networks now show two AFL games each, meaning sharing viewers with Foxtel would reduce their audiences, advertising incomes and therefore the rights fees they would be willing to pay. Seven once shared rugby union Tests with Fox Sports, leaking viewers to audiences which preferred commercial-free coverage and the pay TV network's commentary crew.

AFL boss Andrew Demetriou, unable to entice Nine into a bidding war with Seven/Ten for AFL rights, is seeking an auction between Foxtel and the two free-to-air networks, but they are not buying it. The major issue is that it is still uncertain how the best and second-best AFL games each week will be determined. In the NRL, the broadcaster chooses but the federal government wants families unable to afford AFL on pay TV to still see top games.

Nevertheless, industry sources believe the AFL will go close to its $1bn target, but only with income from Telstra for IPTV and mobile phone rights included. Rugby league should also benefit from Foxtel's willingness to pay more for AFL.

Foxtel's present payment of $53m for four AFL games already exceeds the NRL's receipts of $45m for five games, including the third and fourth best matches. Should Foxtel double its AFL fee, the NRL will demand more.

However, the NRL's contract is with Fox Sports, which is jointly owned by James Packer's CMH and News Ltd, unlike Foxtel where Packer/News each have a quarter share, with Telstra owning half.

Packer and News director Lachlan Murdoch, who have a 20 per cent holding in Ten, are intent on stripping back the costs of a network which have increased $60m, with no commensurate increase in revenue.

Ten is $100m in profit behind both Seven and Nine, yet was once the most profitable network on the street. While Packer and Murdoch will also seek to retain the healthy profits of Fox Sports by paying less for NRL, they are fans of the sport.

''They love what they know and will treat NRL as a loss leader,'' one industry source said.

http://www.smh.com.au/rugby-league/league-news/duelling-tv-networks-may-double-nrls-take-20110302-1bew1.html
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