NRL finds hell hath no fury like a Murdoch scorned
by Dominic White and John Stensholt
Hell hath no fury like a Murdoch scorned, it would seem.
The National Rugby League's humiliating snub to News Corp has set sections of the Murdoch press on a vitriolic campaign for the head of its boss Dave Smith.
Some say Smith asked for it.
On day one of Rupert Murdoch's trip to Australia two weeks ago, the NRL unveiled a surprise $925 million five year deal with Nine Entertainment Co that left News, Fox Sports and Foxtel out of the loop. Bold move.
The sweetheart deal not only stripped News Corp's pay television venture Foxtel of its unique selling point to footy-mad Sydneysiders and Brisbanites – an exclusive Saturday night game. It also guaranteed Nine all the best games.
It was a very public humiliation, and now News Corp seems intent on extracting revenge with a fascinating, almost comical brutality.
First came that mother of all press conferences last Tuesday.
Murdoch personally helped to sew up a much ritzier six-year deal with rival code the AFL, worth $2.508 billion – including free-to-air rights for Seven West Media and digital rights for Foxtel's other co-owner Telstra.
Flanked by an intimidating army of big guns, including fellow billionaire Seven West Media chairman Kerry Stokes, Murdoch coolly snarked that News has always preferred "Aussie rules". (Murdoch's apparent long-held love of the game does not extend to a known favourite club.)
DEMANDS DELIVERED VIA THE OZ
Now, while The Australian provides daily updates on News' shopping list of demands to the NRL if it is to play ball and buy the pay-television rights, columnists in The Daily Telegraph call for Smith's head.
Just in case anyone had missed the point, the same paper, for whom AFL has long been a secondary sport, ran an eight-page lift out on Friday on the Sydney's Swans Saturday afternoon clash with cross-town rivals GWS Giants.
And a long-planned phone hook up between NRL chairmen over the future of the sport on Monday was painted as a plot for a Super League-style breakaway. Many chairman want changes but most observers think that's a bit extreme.
Some senior media executives are surprised by the sheer volume of invective News is spewing given that the competition watchdog is currently scrutinising its influence over sports rights and Australian media in general as it decides whether to oppose Foxtel's 15 per cent investment in Ten Network Holdings.
But take a look at the history and all becomes clear: we may be reaching the denouement of a 20 year tussle.
News Corp and rugby league have been intertwined for the best part of two decades, going back to the Super League days of the mid-1990s.
News Ltd, with a young Lachlan Murdoch an integral part of negotiations, split rugby league in two over the battle for pay-television rights. News, through its then fledgling Fox Sports operation, wanted the rights, while the then Australian Rugby League sided with Optus Vision.
Extraordinarily, the media company went to the great length of forming its own competition, Super League, and enticing big clubs such as the Brisbane Broncos and Canberra Raiders to break away from the NRL.
HISTORY IS INSTRUCTIVE
In 1997, Australia witnessed two rugby league competitions running side by side, a 10-team Super League, including expansion teams in Newcastle and Adelaide, and a 12-team ARL. Some of the ARL clubs had been enticed over to Super League, only for the ARL to launch a desperate counter-bid, funded by Kerry Packer, to keep them in the fold.
While each of the competitions had separate pay-TV deals, remarkably Packer's Nine Network had free-to-air rights for both.
Each competition held separate international test matches and State of Origin series, with New Zealand joining the Super League version for a tri-series competition.
The situation quickly became untenable, with News Corp eventually being found to have spent $900 million on Super League, including taking control of rugby league in England. It also at various stages owned the Broncos and the Raiders, North Queensland Cowboys and Melbourne Storm.
The war ended in 1998 when the two competitions merged, with the ARL and News Corp having joint ownership of what became the NRL. But the deal drove clubs such as Western Suburbs and Balmain to merge. Others, such as North Sydney and South Queensland Crushers, eventually disappeared.
While that was tough for many in the rugby league establishment to swallow, the sport was on the receiving end of another blow in 2007. The NRL, then under the leadership of David Gallop, a former News lawyer, signed a $500 million five year broadcast deal with Nine, Fox Sports and Telstra.
SUCKED THE SPORT DRY
Only a few months later the AFL struck its own five-year deal for $780 million. The perception in rugby league circles was that News, given it then owned half of Fox Sports, acted to keep the value of the rights down so to save it money.
Resentment for that deal still lingers in rugby league circles, and is the reason why many club leaders would not mind seeing News out of rugby league altogether.
They say the media company, which took a large annual dividend from NRL annual earnings that left the competition's balance sheet empty while the AFL was building a huge warchest for junior development and new teams in western Sydney and the Gold Coast, sucked the sport dry.
Fast forward to the past couple of weeks. While News spins the line that clubs are lining up to target Smith, support for him and the NRL among the clubs is actually strong – provided he eventually delivers a good deal.
A substantial proportion of chairmen and CEOs believe News is targeting the NRL purely for commercial gain driven by the embarrassment News executives feel after being outflanked over the broadcast rights two weeks ago.
That embarrassment is added to that felt by Lachlan Murdoch during the last rights negotiations in early 2012, the first after News had exited its 50 per cent ownership of the NRL.
Murdoch was then chairman of Network Ten, which held some AFL rights. Personally more keen on rugby league, and not known as a fan of AFL, the younger Murdoch decided to ditch AFL and go all-in on the NRL and launched a huge bid.
But Nine, Fox Sports and Telstra emerged as the NRL winners, paying $1.05 billion over five years – double what the game received during its jointly-owned days. It didn't make life any easier for then-News Corp Australia boss Kim Williams and left Ten spiralling into financial trouble, which it is yet to emerge from.
SMITH WILL BE HERO OR ZERO
Smith has been targeted by News virtually since he was appointed in late 2012, and has no great love for the organisation.
It is the same for NRL commissioner Graeme Samuel, who was targeted by News publications over his ownership in the Direct Factory Outlets retail business that struck trouble in 2010.
As for Smith, as one NRL chairman put it on Monday his reputation was always going to rise or fall on the value and composition of the broadcast rights deal.
"If he gets a great deal, he's going to be a hero. If he gets a not so great deal, then he's a zero. That's always been the case. That's why people in his position are remunerated so well, they have to deliver. And there's still plenty of time on this one."
