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http://blogs.wsj.com/moneybeat/2013...off-over-cricket-rights/?mod=google_news_blogAussie Broadcasters Square Off Over Cricket Rights
By Ross Kelly
The Ashes isnt the only closely fought contest taking place in the cricket world this year.
Nine Entertainment Co. has long held the rights to broadcast live fixtures on Australian free-to-air television, but could be stumped by a rival bid from Ten Network Holdings Ltd.
Nines grip on the TV rights dates back to the 1970s when the late Kerry Packer, who owned the network, wrested control from the Australian Broadcasting Corp. In a move that transformed a sleepy sport into glamorous and lucrative spectacle, Mr. Packer launched a breakaway league known as World Series Cricket that featured greats of the game like Tony Greig and Dennis Lillee.
In a twist resembling a Shane Warne leg-break, the rights could once again rest with the Packer familyat least indirectly.Australias captain Michael Clarke hits a boundary during the second days play of their third cricket test match against Sri Lanka at the Sydney Cricket Ground January 4, 2013. REUTERS/Tim WimborneREUTERS
Kerry Packers son James is among a group of billionaires that have invested in the struggling Ten Network.
A Ten Network spokesman confirmed it recently lodged a bid for the rights, but wouldnt verify Australian media reports that it has offered around 500 million Australian dollars (US$481.9 million) in payments spread over five years.
Even if Ten Networks bid is accepted, Nine can match it. We have an opportunity to make the final bid, a spokeswoman for Nine told MoneyBeat.
Cricket Australia, the sports main governing body, said it has received significant interest in the rights, but wouldnt comment further. Australias squad is due to take the field against England in the first of five Ashes tests in the U.K. in mid-July, with a return series down under over Christmas.
Ten Network swung to a first-half loss after it was hurt by weak advertising markets and a series of program flops including reality show Being Lara Bingle about the ex-girlfriend of current Australian cricket captain Michael Clarke.
The Sydney-based network, which also counts Lachlan Murdoch and mining magnate Gina Rinehart as major shareholders, has churned through three chief executive officers in quick succession as it attempts to return to profit.
Securing the rights would form a key plank in current CEO Hamish McLennans attempt to broaden Ten Networks appeal. Hes already secured rights to broadcast the 2014 Winter Olympics.
However, an offer of A$500 million would almost be as high as Tens market value of A$686 million.
Deutsche Bank's Jennifer Kruk reckons a bid of that size probably wouldnt be profitable in its own right, although it could allow promotional activities that are hard to value.
Cricket generates about A$60 million in free-to-air television advertising revenue each year, plus A$20 million in production costs that are currently split between Nine and cable television outfit Foxtel. That makes a bid averaging A$100 million annually over five years appear hard to stack up.
A worse-than-expected revenue performance could even put Ten in breach of its debt covenants, she says.
While we are generally supportive of Tens sport strategy, the thought of a A$500 million bid does make us nervous, particularly if a large upfront payment is required, says Ms. Kruk, who rates Ten Network at Hold.
http://www.canberratimes.com.au/sport/cricket/nine-uncertain-over-deal-20130527-2n7k0.htmlNine uncertain over deal
Date May 28, 2013
Jon Pierik
Sports writer with The Age
Jeff Browne. Photo: Joe Armao
Channel Nine says it remains uncertain if it will match Ten's $500 million bid to poach the rights to international and domestic cricket.
Nine's managing director, Jeff Browne, said the network was undecided about launching a counter-offer, with the Cricket Australia deadline next Monday.
He said money was not the only issue, and his network had had positive discussions with CA, despite industry speculation there were simmering tensions between the two parties.
Talks broke down earlier this month over the issue of domestic cricket, with CA lodging a writ in the Supreme Court of Victoria, due to be heard on Friday.
As reported by Fairfax Media, the writ is to clarify the status of the Big Bash League and whether it is subject to Nine's last right of refusal - given this form of the game did not exist in Australia at the time of Nine's last deal.
Nine sources labelled the legal case by CA a ''sideshow'', saying it was disappointed with the games being played by CA's lawyers given the network has no interest in the BBL.
Ten's five-year offer is understood to be worth $400 million for the international rights and $100 million for the BBL.
Nine argues it only needs to match the $400 million to retain the rights.
Nine's two US-based hedge fund shareholders, Apollo Management and Oaktree Capital, have reportedly suggested they do not want Nine to bid for the rights but are willing to budge if they can be persuaded the investment is worthwhile. The network reportedly has new debts of about $700 million.
Nine's nine-member board includes four hedge fund directors, and former federal treasurer Peter Costello.
Fox Sports has broadcast the BBL, but Ten is favoured to at least grab this even if the international rights remain with Nine. Ten has not ruled out on-selling some matches to pay TV.
http://www.afr.com/p/business/sunday/nine_decides_over_cricket_rights_yQvOozAzv9mBpITb6z21CKNine pads up for cricket deal
PUBLISHED: 02 Jun 2013 15:11:00 | UPDATED: 03 Jun 2013 09:30:13If Nine Entertainment succeeds in its bid for cricket broadcasting rights, Nine is likely to own the rights to the Test matches and one-day internationals, with the Big Bash competition going to Ten. Photo: Getty Images
Ben Holgate
Nine Entertainment Cos hedge fund owners and the board have given the green light for chief executive David Gyngell to match Ten Network Holdings audacious $550 million bid for the right to broadcast cricket, with the networks set to share the rights for the next five years.
The size of the existing offer is a big win for Cricket Australia boss James Sutherland, who will achieve his aim of increasing crickets annual revenue through domestic media rights by about twice as much as under the old deal.
Nines board, which met on Sunday, has also given the go-ahead for the free-to-air television, digital and ticketing group to acquire WIN Corps Adelaide station with an option to buy its Perth station.
However, both deals rest on Mr Gyngell and his management team. They are believed to be facing difficult last-minute negotiations with WIN Corp owner the billionaire Bruce Gordon. Nine is also trying to strike a number of smaller side deals such as a contract to on-sell digital broadcasting rights for the international cricket to Telstra and a higher fee from regional affiliates to help pay for the cricket bid.
Tipped to match Tens $550m bid
The network is widely expected to match Tens $500 million in cash bid plus an additional $50 million in contra advertising for the five-year cricket rights, which start in 2013-14.
Nine has last rights and has until today to finalise an offer for the sport it has broadcast for 36 years.
Nine would win the rights to televise Test matches and one-day internationals, with the Big Bash competition (costing about $20 million a year) likely to go to Ten. Fox Sports Australia previously owned the rights to domestic games.
This would leave Nine paying about $80 million a year in cash plus $10 million in contra advertising for the rights, which includes both television and digital media.
Cricket Australia is understood to be keen to monetise the digital rights, and is considering either joint ventures or partnerships with the winning bidder.
Although Nines decision about whether to bid for the cricket is not dependent on its talks with WIN, the two issues have been running concurrently and both may come to a head on Monday.
It is understood that Nine and WIN had not reached agreement on prices for the stations by Sunday.
Mr Gordon is overseas.
Nine cannot own both the Adelaide and Perth stations unless the 75 per cent reach rule is abolished, hence the need for an option on the West Australian station.
Unlikely to scrap reach rule
The rule prevents a TV licence holder from reaching more than 75 per cent of the national population. However, it is unlikely the rule will be scrapped in the short term following the Labor governments botched attempt to get rid of it earlier this year.
Sources confirmed the two WIN stations were likely to be valued on earnings before interest, tax, depreciation and amortisation (EBITDA) multiples of between eight and 11 times.
It is understood WINs Adelaide station generates about $15 million a year in EBITDA, and its Perth station about $22 million. This implies a valuation range of $120 million to $165 million for Adelaide, and a range of $176 million to $242 million for Perth.
Mr Gordon wants to sell the stations in order to clean up WINs asset portfolio and to realise some cash, in order to de-risk the privately held group, said a source. WIN is believed to have a modest amount of debt.
Mr Gordon is also interested in possibly merging WINs TV assets with Ten at a later date, said sources. Mr Gordon is Tens largest shareholder with a stake of about 15 per cent. However, a merger of WINs regional TV business with Ten would require the scrapping of the reach rule.
Big Bash move good for Ten
Nine owns stations in Sydney, Melbourne and Brisbane, and would receive revenue and synergy benefits if it were to by either or both of WINs Adelaide and Perth stations. Cricket Australia simply wants to ensure the rights holder can guarantee a national broadcast of the sport.
Nines regional affiliation agreement with WIN expired last June, and they have been on a rolling deal since. Nines program supply deal for WINs Perth station expires this month, and that for the Adelaide station ends next year.
Although the US hedge funds that control Nine Oaktree Capital and Apollo Global Management had previously expressed concern about the high price, they indicated they would not stand in the way if management could mount a convincing business case. Citigroup analyst Justin Diddams said sports rights were increasingly valuable in a market where viewers are fragmented across television and internet platforms. He said buying the rights to the Big Bash domestic Twenty20 competition was a good move for Ten.
