Broadcast rights threat to NRL and Super Rugby

[Rich102]

Sanzar officials and the Warriors are watching a crucial legal appeal against a landmark Australian court decision, which could strip millions off their annual revenues.
In fact, Warriors chief executive Wayne Scurrah has warned the very existence of competitions such as the National Rugby League and Super Rugby could be brought into question over the coming months.
Australian sport has been rocked by telecommunications company Optus winning a Federal Court case which Australian Football League and NRL officials claim will cost them upwards of $386 million in lost broadcast fees.
The decision cleared the way for Optus to use online technology for delivering live sport, including football matches, on delays of only one to two minutes through mobile devices.
However, anxious AFL and NRL officials are reeling, saying the decision will rob them of hundreds of millions in lost online broadcasting fees.
The AFL earns $197m in online rights from its current five-year deal with Telstra, Optus' chief rival.
The NRL expects to earn just as much from live online fees in its soon-to-be-negotiated broadcasting deal for next season.
Although most media focus has been on the impact to the AFL and NRL, any live sport on free-to-air television in Australia is subject to the legal decision – drawing All Blacks, Warriors, Breakers and Wellington Phoenix matches into the stoush.
Along with Scurrah, Sanzar's Sydney-based chief executive Greg Peters expressed concern over the court ruling, with both saying their organisations would be watching developments for potential impact.
Sanzar derives significant broadcasting revenue out of Australia which is then shared with the New Zealand and South African rugby unions.
The loss the NRL faces is around half of the entire premiership salary cap for its 16 teams.
"We are obviously aware of the story this week, sports franchises in general are funded through broadcast rights," Scurrah said.
"Whether it's World Cup events like we've just hosted, Super Rugby or the NRL, the value of broadcast rights is essential to the survival of actual sports competitions."
Scurrah also backed the aggressive comments of NRL boss David Gallop, who said grassroots development, players and fans stand to be hit hardest in a failed legal appeal.
"It will have a huge impact. At the end of the day, the players are looking for more money, which is fair enough, and they want to be paid as much as they can," Scurrah said.

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"But if broadcast rights aren't paid for the sports, the best players won't be playing in those competitions."
Sanzar's $615m broadcast deal expires at the end of 2015, affording them more time to strategise.
Nevertheless, Peters says his organisation is watching closely, also acknowledging potentially serious ramifications.
"I understand where the general situation is at and am watching developments with interest," Peters said.
"It doesn't directly impact on Sanzar at this moment, but it could do in future if this case sticks on appeal and the precedent is fixed.
"The reason we're not impacted now is that the difference between Sanzar's current broadcast rights deal and that of the AFL for example, is that we haven't carved our rights up into separate deals for television, online and 3G services.
"We also operate our rights largely within the realm of pay TV, not free-to-air.
"The pay TV platform has bank-rolled the professional game. Without it, we wouldn't have professional rugby.
"If Sanzar was to go down a different route in future and carves up its rights, as the AFL and NRL do, then this decision would have a bigger impact on our business.
"In a rugby context, it's the broadcasting and commercial revenues which fund the unions, who in turn fund the development of the game and pay the players.
"Player salary levels in New Zealand and Australia are driven by the amount of player-generated revenue, which includes broadcasting."
AFL and NRL officials are set to begin appealing the Federal ruling, as will Telstra which sponsors both competitions and pays huge fees for online rights.
It has already begun furiously lobbying Government ministers to legislate protection.
Despite the Federal Court making the ruling under the auspices of an Australian Copyright Act which mirrors New Zealand's, a similar situation evolving on this side of the Tasman is unlikely.
All Blacks sponsor Telecom and rivals Vodafone, sponsors of the Warriors, would like to broadcast respective matches on mobile devices at no cost, but neither the NZRU nor the Warriors could afford the hit on lost fees.
Similar action in New Zealand inspired by either Telecom or Vodafone would have to be fought under the Copyright Act and even if successful, would only allow for re-transmission of live free-to-air sport.
While Australian sport still has a high number of live free-to-air major sport broadcasts, including the Bledisloe Cup and NRL grand final, pay TV operator Sky now has a virtual monopoly on live sport broadcasting within New Zealand.

http://www.stuff.co.nz/sport/league/6367873/Broadcast-rights-threat-to-NRL-and-Super-Rugby

 

[Rich102]

I don't think we need this right now.
Besides, how many people watch a game of football on a cellphone?

 

[hitman82]

I don't think we need this right now.
Besides, how many people watch a game of football on a cellphone?

I never thought people would take to browsing the net on a cellphone. Cell phones and Facebook are taking over the world.

 

[Micistm]

I was reading about this case last week. It's a worry. Current law has not kept up to date with technology, creating window loopholes to exploit. But I guess that's a lawyers job, to find those loopholes.
Everyone knows it isn't right, or fair. If the case is lost, a floodgate will open. Maybe all sporting codes should get together on this one, hit govts to change the law to shut the loophole, shut it fast.

 

[SpaceMonkey]

I was reading about this case last week. It's a worry. Current law has not kept up to date with technology, creating window loopholes to exploit. But I guess that's a lawyers job, to find those loopholes.
Everyone knows it isn't right, or fair. If the case is lost, a floodgate will open. Maybe all sporting codes should get together on this one, hit govts to change the law to shut the loophole, shut it fast.

I don't really seethe problem TBH. This only applies to free-to-air broadcasts- it simply creates a convenient way to watch something that you've already had free access to at an earlier time at your convenience on a number of devices. In principle it's not really any different to a VCR, in that it's a technology that allows you to play back something thats been broadcast to you at a later date. Telstra have a history of being overly litigious and are throwing their weight around as usual on this.
If Optus were providing free access to pay-TV only games it would be a bigger problem, but AFAIK they're not.

 

[devoid]

I don't really seethe problem TBH. This only applies to free-to-air broadcasts- it simply creates a convenient way to watch something that you've already had free access to at an earlier time at your convenience on a number of devices. In principle it's not really any different to a VCR, in that it's a technology that allows you to play back something thats been broadcast to you at a later date. Telstra have a history of being overly litigious and are throwing their weight around as usual on this.
If Optus were providing free access to pay-TV only games it would be a bigger problem, but AFAIK they're not.

That's interesting to know. However, if it is digital broadcast, it doesn't prevent someone with a crude proxy address to pirate/stream content at a cheaper rate than current official subscriptions on offer. It just seems that with the current law, the NRL doesn't have full control of it's own product, unlike what deal the negotiated with Free-to-Air, and the corresponding sponsors/advertisers of those broadcasts. If they had control of all delayed digital feeds (and catch-up content, like on Bigpond Video) they get the chance to reap the rewards of advertising, and subsriptions -- at the end of the day it is NRL product, and to lose control of any possible income related to your own product seems less than ideal, and potentially very detrimental.

 

[SpaceMonkey]

That's interesting to know. However, if it is digital broadcast, it doesn't prevent someone with a crude proxy address to pirate/stream content at a cheaper rate than current official subscriptions on offer.

But only FTA content is offered under this service. Illegally accessing pay tv streams will still be illegal, no change there.

It just seems that with the current law, the NRL doesn't have full control of it's own product, unlike what deal the negotiated with Free-to-Air, and the corresponding sponsors/advertisers of those broadcasts. If they had control of all delayed digital feeds (and catch-up content, like on Bigpond Video) they get the chance to reap the rewards of advertising, and subsriptions -- at the end of the day it is NRL product, and to lose control of any possible income related to your own product seems less than ideal, and potentially very detrimental.

I think if the details of this are worked out correctly this will work out fine- provided for example that the loss of control is minimal and there's potential benefits, such as interste viewers getting near-live access even if Nine aren't going live to their region. Provided advertising is retained there's no loss of value there. Telstra will be butthurt about it, but what's good for Telstra is not automatically good for the NRL and this hasc wider implications anyway.

 

[devoid]

Yeah, sort of -- but what FTA is in Australia is not necessarily FTA in Europe. The broadcasting rights over there relies on digital subscriptions. Regardless, as soon as the NRL (or any of the other codes involved) loses it's own rights, future broadcasting deals cannot remain as attractive. NINE will not stump up as much for the right to show the NRL if it is beamed free to another device. I actually think the ramifications of this is potentially huge, in varied ways.

 

[SpaceMonkey]

Proxy access to streams from other countries is already something that happens but it's not so widespread that it's become much of a problem, its too fiddly gor the vast majority to bother with. I doubt this will change that.
I don't see Nine caring too much about their FTA being rebroadcast, at the end of the day it's effectively extra viewer numbers.

 

[devoid]

Proxy access to streams from other countries is already something that happens but it's not so widespread that it's become much of a problem, its too fiddly gor the vast majority to bother with. I doubt this will change that.
I don't see Nine caring too much about their FTA being rebroadcast, at the end of the day it's effectively extra viewer numbers.

Maybe I haven't explained it well enough... It's not about NINE worrying about people seeing their broadcast, it's about the lessening value of NRL's product. If people can find a cheaper way to get it, why would NINE stump up as big a bundle of cash to buy it from the NRL? Would another way to watch the NRL affect how FOX feels about spending up big? If one guy who sets up an illegal business streaming NRL content and charges a membership access to his feed for say, 1EURO, how many NRL fans in the Northern Hemisphere would discontinue their Setanta subscription? Would that impact on how much money Setanta would pay for the right to broadcast the games in Europe? Should the NRL not have rights over the broadcasting of their own product, or at least terms to negotiate with broadcasters? This is about protecting the income of the NRL, the clubs, and the players -- especially in the long term.

 

[Micistm]

Maybe I haven't explained it well enough... It's not about NINE worrying about people seeing their broadcast, it's about the lessening value of NRL's product. If people can find a cheaper way to get it, why would NINE stump up as big a bundle of cash to buy it from the NRL? Would another way to watch the NRL affect how FOX feels about spending up big? If one guy who sets up an illegal business streaming NRL content and charges a membership access to his feed for say, 1EURO, how many NRL fans in the Northern Hemisphere would discontinue their Setanta subscription? Would that impact on how much money Setanta would pay for the right to broadcast the games in Europe? Should the NRL not have rights over the broadcasting of their own product, or at least terms to negotiate with broadcasters? This is about protecting the income of the NRL, the clubs, and the players -- especially in the long term.

Spot on, that's exactly correct. If this is not appealed and successfully so, it is the thin end of the wedge, and poses huge problems. Lost revenue will hurt sporting codes big time.

 

[Rich102]

As I recall NZRugby had a dispute with TVNZ about TV rights and pulled coverage. TVNZ started televising League instead. League gained a lot of converts. Don't know who blinked first but rugby was back on soon enough.
About 1971 or so, if I remember right. (Which isn't always the case.)

 

[SpaceMonkey]

Maybe I haven't explained it well enough... It's not about NINE worrying about people seeing their broadcast, it's about the lessening value of NRL's product. If people can find a cheaper way to get it, why would NINE stump up as big a bundle of cash to buy it from the NRL?

Nine (or whoever) will stump up the cash for the same reason they do now- the right to broadcast live, and add their own advertising content. Remember anyone who uses the proposed service is still watching a rebroadcast of Nine's stream, and if they're watching it live or on minimal delay, they're going to get all of Nine's advertising as well. So it doesn't reduce the value of the content to Nine at all, and they should still be willing to pay the NRL for it.

Would another way to watch the NRL affect how FOX feels about spending up big? If one guy who sets up an illegal business streaming NRL content and charges a membership access to his feed for say, 1EURO, how many NRL fans in the Northern Hemisphere would discontinue their Setanta subscription? Would that impact on how much money Setanta would pay for the right to broadcast the games in Europe?

You just answered your own question, it would be illegal and I'm sure the NRL would have them shut down, this happens already. AFAIK this ruling only covers the rebroadcast of FTA content within Australia- yes there can be ways of circumventing these kind of services but they're a pain in the arse and are unlikely to be widely enough adopted to make a significant difference to Sentanta's subscriptions.

Should the NRL not have rights over the broadcasting of their own product, or at least terms to negotiate with broadcasters? This is about protecting the income of the NRL, the clubs, and the players -- especially in the long term.

They do, and they still will. All these services give the audience is the ability to watch an FTA broadcast at a later date at their convenience. In fact it's been available for the last 30 years or so- ever heard of the VCR?

 

[devoid]

Again -- it's not about the value of content to NINE, or any other broadcaster. This can only benefit them by paying less. It doesn't help the owners of the product -- the NRL. But if you're confusing a VCR for interpretations of law, and what implications those interpretations that preceded the current digital technology have on the viability of business, and retaining the highest possible value of a sport's broadcasting rights, then there is little point having a conversation about this.

 

[SpaceMonkey]

Again -- it's not about the value of content to NINE, or any other broadcaster. This can only benefit them by paying less. It doesn't help the owners of the product -- the NRL.

Of course it's about the value to broadcasters- because that determines what they'll pay the NRL. Value to the NRL and value to the broadcasters are the same thing essentially.

But if you're confusing a VCR for interpretations of law, and what implications those interpretations that preceded the current digital technology have on the viability of business, and retaining the highest possible value of a sport's broadcasting rights, then there is little point having a conversation about this.

I used the VCR comparison because thats pretty much exactly what the courts appear to be basing their ruling on-

"The Federal Court ruled that the service had not reached copyright because it was the users were responsible for recording the NRL and AFL games, not Optus, and they were made for private and domestic use."

The way the service works is something like this: You sign in to your Optus account, and select the FTA programmes you want to record. then once they have started recording (2 minutes or so after, which is enough for a reasonable recording buffer), you can access them through their website on your PC or an app on your phone. Optus are not AFAIK offering a range of games available to download and watch in the same way that the current Telstra/NRL website works.
This really isn't a whole lot different to setting your VCR, Foxtel IQ box or digital PVR, in fact I can set something up with pretty much identical capabilities using a TV tuner card, recording software and my home broadband connection. The Optus service just makes it a whole lot easier for people with little technical nous to do exactly the same thing.

Some more detailed discussion of the service and the court ruling here: http://www.crikey.com.au/2012/02/02/afl-nrl-appeal-likely-but-optus-tv-ruling-the-right-call/

 

[devoid]

Of course it's about the value to broadcasters- because that determines what they'll pay the NRL. Value to the NRL and value to the broadcasters are the same thing essentially.

This is fundamentally wrong. The NRL want to make as much money as possible when selling THEIR OWN PROPERTY (broadcasting rights). NINE wants to pay as little as possible for the right to show the NRL, to maximise their (NINE's) profits. The current law has allowed a re-broadcast in a format not considered at the time the law was written. It pays no mind to the fact that the owner of the product did not negotiate the terms of their contract with NINE regarding a re-broadcast on a different format. You might think that 'oh, but it's only 2 minutes, on something like a VCR' now. But that doesn't change the fact that the owner of the product didn't get to negotiate this in the terms of the current broadcast contract, and get the chance to maximise their potential earnings. How else can this law be interpreted in the future? The law needs to be changed.

 

[shiznit]

how often are the Warriors on FTA TV?? hardly ever...

how often are the Super Rugby games on FTA TV?? never...

im sure the competitions in Ausralia will have it overturned... and we dont have anti-siphoning laws in NZ so it wont happen here.

 

[ozbash]

Anyways..... was talking to the little Greek dude, Denis Katsanis (sp) at the basketball last week and asked if he knew when/if Sky were going to show the NRL this season.

He said it was up in the air, nothing was happening and it involved an extra $30 mil.

See Sky dont have any NRL games in the March preview thingy they show..

 

[devoid]

There was an article on that very issue OZ. Talks of the deal SKY put forward stalled because of the changeover to the Independent Commission -- it should be resolved soon enough.

 

[SpaceMonkey]

This is fundamentally wrong. The NRL want to make as much money as possible when selling THEIR OWN PROPERTY (broadcasting rights). NINE wants to pay as little as possible for the right to show the NRL, to maximise their (NINE's) profits.

Well of course- the buyer wants to pay the minimum, the seller wants the maximum. Thats how capitalism works. But the actual value determines what ends up getting paid.

The current law has allowed a re-broadcast in a format not considered at the time the law was written.
It pays no mind to the fact that the owner of the product did not negotiate the terms of their contract with NINE regarding a re-broadcast on a different format. You might think that 'oh, but it's only 2 minutes, on something like a VCR' now. But that doesn't change the fact that the owner of the product didn't get to negotiate this in the terms of the current broadcast contract, and get the chance to maximise their potential earnings. How else can this law be interpreted in the future? The law needs to be changed.

The court has rule that it's not in effect a re-BROADCAST- because the individual user has to elect to record the content in order to access it.

Of course this particular scenario wasn't envisioned when the law was written- this happens with technology.

Yes the NRL/AFL/Telstra may succeed in forcing an amendment to the law- but it's going to be quite difficult to word without having a bunch of other unintended consequences. What happens of for example Samsung release a TV with built in recording and network capability, that I can program to record my favourite league games, then log into remotely from my phone and stream the recorded game to my mobile? This could easily be developed with current technology and would not be expensive to implement, and I think most people would see it as a legitimate use of technology, and find the idea of such a thing being illegal ridiculous. What Optus are offering is the same service on their hardware, and it's going to be pretty hard to word a law that prevents what they are doing but doesn't outlaw home recording technology.

And at the end of the day this doesn't have as big an impact on Telstra's rights as they seem to be suggesting. They still have exclusive rights to all pay-TV games, and exclusive rights to host archives of past FTA games for users to browse and watch at their leisure. It's going to be pretty hard under the current laws to erode these rights any further.

What this may do however is drive sport further into being pay-TV only.