Little room to move for TV's football coverage
ELIZABETH KNIGHT
October 9, 2009
The move by Rupert Murdoch's News Corporation to cut several aspects of its relationship with rugby league has been described by one insider as a cupboard-cleaning exercise that will involve getting rid of the company's 50 per cent of the NRL and its ownership of this year's premier team, Melbourne Storm, and its majority ownership of the Brisbane Broncos.
News Corp's part ownership of the NRL is a legacy of the truce made between it and Kerry Packer after the monumental Super League battle waged 10 years ago that threatened to split the code.
Murdoch apparently now feels there is nothing to be gained by continuing to own any part of the NRL, the structure of which is messy and riddled with conflicts.
The idea is to appoint a group of businessmen as commissioners (a board) to oversee the operations of the new NRL. A similar view was apparently arrived at by a group of club bosses who for several months have been hatching plans to clean up the corporate structure.
The NRL is owned half by News and half by the Australian Rugby League. The revenue it receives primarily from selling multimedia rights and then from gate takings goes to the various clubs.
Part of the News Corp exit deal will be retention of its rights of first and last refusal over the all-important television broadcasts, which Murdoch clearly feels are strategically important.
The value of News Corp's 50 per cent of the NRL is negligible and is unlikely to be sold. Rather, News would withdraw. It was suggested that the $8 million in revenue the NRL ownership earns for News is pumped back into the teams it owns - the Storm and Brisbane Broncos.
It is also understood that News has no desire to sell either its 50 per cent of Fox Sports or its 25 per cent of Foxtel.
Meanwhile, there is the battle between the NRL and the AFL over which should receive higher bids for the television rights to the games.
The AFL contract is worth about $780 million over five years and the NRL about $600 million.
Thanks to recent ratings popularity the NRL is suggesting it should not play second fiddle to the AFL. Clearly the AFL, which is now looking to renegotiate the multimedia rights for $1 billion, disagrees.
It is now a race to see who can tap the networks first. While the NRL rights come up for negotiation next year and is thus the first cab off the rank, there are suggestions the AFL will bring its negotiations forward.
There is a definite first mover advantage to these negotiations as the kitty available to all the networks is limited.
The late Kerry Packer's famous swansong deal was to launch a huge bid for the AFL and wrest the coverage from Seven.
Seven is now upsetting the status quo by suggesting it wants a piece of the ARL pie.
Yesterday the Herald reported that rugby league would face a short-term funding gap and that the chief executive of the Seven Network, David Leckie, expected the code would seek new revenue by unbundling its TV rights and offering four separate packages - Origin, Test matches, NRL regular-season matches and the finals series.
''We're very keen to submit a bid for State of Origin and Test matches,'' Leckie said. ''We think rugby league should split its properties into three, or four, with even the finals going to a separate network.''
Perhaps Leckie's is the only one of the three commercial networks in the enviable position of having its programming executives in charge of its kitty.
Seven's private equity partner KKR is no doubt looking over its shoulders assessing whether entering a bidding war for any part of the disaggregated football package would attract a return from advertising dollars.
At Ten the management will be closely watched by its banking syndicate, which would be asking many questions about any big-ticket program acquisitions. At Nine the position is even more dire.
Having said that, these big-ticket sporting events are the highlight of the television calendar and will attract premium advertising dollars.
There will be a push to outlay an increased amount for pay television and digital and mobile phone rights. But if either the NRL or the ARL disregards the fact that the bidders are financially strapped, they are likely to be disappointed.
