Nine CEO David Gyngell warned NRL boss David Smith over secret deal
Nine Network chief executive David *Gyngell advised under-fire *National Rugby League boss David Smith that he risked sidelining the code’s long-term partners Fox Sports and Telstra if he insisted on striking a TV rights deal without them.
Sources close to the $925 million talks said NRL chief executive and Australian Rugby League Commission chairman John Grant put pressure on Nine to enter exclusive talks with the code, casting Nine as the player holding the “catcher’s mitt”.
One source inside the secret talks said rugby league bosses became “very aggressive” in the weeks leading up to the August 10 announcement, and “railroaded” Nine as part of a controversial plot to split the rights.
“The NRL had taken a very firm view they wanted more games on free-to-air television,” a source said. “Nine was pushed into trying to do a free-to-air deal with the code whether they could or couldn’t. They pushed hard for a separate deal.”
It is said that Mr Gyngell tried to bring Fox Sports and Telstra to the table amid fears NRL bosses were cutting the pair “out of the deal” by leaving them “outside the room”.
The bombshell revelation shows Mr Smith was not only *determined to gain more expos*ure for the code on free-to-air television to raise the profile of the sport, but also at any cost, even if it meant souring relations with two major commercial *partners.
Fox Sports and Telstra have poured billions of dollars into the sport, standing firm with continued financial support even after the publication of a report two years ago into doping and links between sporting codes and organised crime.
There are also suggestions the code is in breach of its own governance standards for failing to enter into due diligence by sending an official tender *document.
Shortly before the NRL began a short exclusivity period with Nine to agree on the deal, Credit Suisse Australia chief John Knox, a key adviser to the NRL, met multiple bidders, *telling them the code would return* with an official tender document. The document was never sent, raising question about whether the NRL suffic*iently tested market demand to get the best possible price for its rights, and the league’s 16 clubs.
The NRL is now facing an *uncertain future after banking on a massive jump in the price of the rights. Broadcast revenue *accounts for the vast majority of the code’s annual revenue — $225.8m or 65 per cent of total revenue, according to last year’s annual report.
High-level sources at News Corp, which operates Fox Sports, warned that Mr Smith had devalued the remaining rights after handing two of the sports program provider’s highest-rating timeslots to Nine. (News Corp is publisher of The Australian.)
While Fox knew the NRL was keen to attain more free-to-air coverage and was prepared to work with the code, it was never told of a plan to sell the four top games in each round.
An NRL spokesman said: “We are back in negotiations and will not be discussing the TV rights deal any further until those negotiations are *concluded.”
Nine declined to comment.
Yesterday, The Australian revealed* that Telstra was seriously considering terminating its 17-season association as naming rights sponsor after the NRL awarded streaming rights to Nine, and also failed to give any warning.
Sources close to the telecommunications giant said Telstra, which has committed to spend $100m with the code under its current five-year deal, was close to tearing up the lucrative title sponsorship contract.
If so, the Telstra Premiership would need to be renamed and the ARL Commission, rugby league’s governing body, would have to start a search for a new naming rights partner.
The size of the rugby league deal was not only the biggest in Australian free-to-air TV history, it also marked a departure from the code selling the free-to-air components and pay-TV components in conjunction.
Fox Sports, Telstra and the Seven Network this week made the largest commitment to any football code in Australia, signing a record $2.508 billion deal with the Australian Football League for its TV and digital rights.
Growing disquiet about the rugby league deal has spread to the clubs, and 12 are *seriously considering not signing their participation agreements, sources say.
