Google and NRL: a new league of secret rights discussions?
Date: 17 June 2015
Elizabeth Knight
Business columnist
Even the spectre of Google being courted by the NRL as a potential bidder for digital rights is causing neck hairs to stand on end in the media and communications industry.
Officially, there has been no comment from either the NRL or Google.
Google has plenty of form in doing deals with premier sporting bodies around the world and it makes perfect sense that it may take an interest in the digital rights to the game.
And you can't blame the NRL for attempting to squeeze out the biggest price possible for the rights to show the games.
Doing a deal with Google would not detract from the regulatory requirement that the big games get shown on free-to-air television live.
Ultimately, the only part that Google can get its hands on are the digital rights – and these are owned by Telstra.
Thus, it seems pretty unlikely that Google would bid for the entire package of NRL rights and offload the majority of it to free-to-air and pay-TV operators.
Given the free-to-air networks are something of a protected species when it comes to broadcasting marquee sporting events, the NRL's auction can only really have three bidders in the room. And given Ten can't afford it, the interested parties falls to two. Generally one of the two financially viable networks picks up the AFL (Seven) and the other the NRL (Nine).
Foxtel is the only traditional pay-television provider so it picks up some of each code. It is all pretty neat.
Indeed, given this landscape both football codes have done well to extract as big a price as they have until now.
The potential for Google to enter the auction room is interesting if it is true. The NRL is presumably looking for someone to pitch in a bid against Telstra which now has them – having paid $100 million in 2012 for five seasons.
Google has got plenty of form around the world doing deals with sporting codes. Earlier this year it nutted out a contract with the US National Football League to show highlights, post game recaps, clips and analysis. In 2013, it made a deal for the online broadcast of All Blacks games internationally and it has also previously signed deals to broadcast online the Twenty20 Indian Premier League competition.
Running full NRL games on YouTube is certainly someone that falls within
its operating model.
Thus, the NRL is probably looking for some competitive tension in the bidding for digital rights.
Over time an increasing number of people are turning to digital services to consume content. In theory, the digital rights will become more valuable.
The big sporting codes have been relying on the free-to-air broadcasters and Foxtel to hand over increasing amounts of money each time the rights are re-negotiated.
It is rumoured both codes are looking to trouser around $2 billion in the next five-year round of negotiations.
What appear to be optimistic expectations are set against the backdrop of a sluggish advertising market for television and increased competition from video-streaming services for free-to-air television and particularly for Foxtel.
On the one hand, the increased competition for eyeballs will place additional pressure on the free-to-air players and Foxtel to secure high rating sport. On the other hand, the competition reduces their ability to pay too much and sacrifice profitability.
But there is a clear trend towards the owners of content bypassing traditional media intermediaries like television networks and using over-the-top mechanisms to programs direct to an audience. Some international sporting bodies run their own apps and Netflix is a prime example of a service that does the same thing with television series.
