Rights price likely to take a dive before Rio
by: Darren Davidson and Simon Canning
From: The Australian
August 13, 2012 12:00AM
THE nature of Olympic broadcasting rights is set to change fundamentally after the success of Foxtel's multi-channel and tablet app and consumer frustration at parts of Nine's delayed London 2012 coverage.
While the Games provided strong ratings for Nine, Foxtel's strategy of offering eight TV channels and streaming events to mobile devices will put pressure on the next free-to-air broadcaster to offer a better multi-channel experience.
Pete Campbell, head of sport for Foxtel, told Media that when the broadcaster bid for the mobile rights in 2007, the iPhone had only just entered the market and the industry had not foreseen the impact of apps and streaming on viewers.
"One of the big things for the next Olympic Games will be search and recommendation and these things will become even better," Campbell said.
Consumers would expect multi-channel coverage as a minimum for the next winter and summer Games, forcing the free-to-air networks to re-examine how they used their digital multi-channels, one commentator close to Fox Sports said.
The International Olympic Committee has not started formal negotiations with local networks for the 2014 Winter Games in Sochi and 2016 Summer Games in Rio. It will delay negotiations until after the National Rugby League rights are decided.
But Australian media executives believe the IOC asking price will be too high and will seek to emulate a deal similar to that achieved by CBC in Canada, which regained rights to broadcast the Games, apparently at a reduced cost compared with the previous deal for the London Games won by a private consortium.
Foxtel's sales house Multi Channel Network has already reaped the benefits of the pay-TV network's multi-channel broadcast, which had led to advertisers reappraising the medium.
MCN, which sells airtime on behalf of Foxtel, will begin negotiating deals with media agencies for Foxtel's 2013 airtime in mid-October when next year's programs are unveiled.
Anthony Fitzgerald, MCN chief executive, said the ratings exceeded expectations and the response from advertisers and sponsors was "glowing". Mr Fitzgerald has returned from London, where Foxtel's eight dedicated channels were piped directly into the hotel rooms of its clients.
"The Games were the first in the period of personalisation, and it's really reinforced the relevance of Foxtel and a multi-channel television service for existing and new consumers and, importantly, advertisers," Mr Fitzgerald said.
The coverage earned the broadcaster a larger share of the total TV audience than free-to-air channels Seven and Ten at times.
On Sunday August 5, the combined audience for eight channels peaked at 1.27 million at 8.20pm, the highest recorded audience of any program since Foxtel was launched nearly 17 years ago.
"I think that will stand us in good stead as we go into the upfronts season and negotiations for 2013," Mr Fitzgerald said.
"There were some people saying prior to the Games that Foxtel was disadvantaged for not being able to broadcast highlights. The ratings prove this wasn't the case."
He praised Nine Network's free-to-air Olympics coverage and said some of the criticisms of the channel about ratings were unduly harsh as the same alternative viewing did not exist at previous Games. Foxtel's Olympics app live had 160,000 downloads.
"When the post-analysis is done we will probably find total viewing to the Olympics has been as good as any Olympics previously other than Sydney or any Games in a similar time slot. With the anti-siphoning restrictions they did as much as they could with only being allowed to simulcast on the HD channel."
Subscription TV has always played second fiddle to the free-to-air networks, but a strong focus on data and research is helping the industry steal share. Advertising spending figures for June revealed subscription TV was up 11.3 per cent in the 12 months to June, with the metro TV market posting a 4.1 per cent decline, according to Standard Media Index data. June posted a sharp increase of 29.2 per cent driven by the London Olympics, while the metro market shrank 1.3 per cent.
MCN sold nine Olympics sponsorship packages, with the last berth sold to Foxtel's 50 per cent part owner Telstra.
Mindful of not wanting to be drawn into a war of words with the free-to-air networks, the former Seven sales executive is unwilling to take aim at them, preferring instead to talk up subscription TV's contribution towards increasing total eyeballs.
"We believe there are two things occurring: there is a shift in share, no doubt, but we are also driving the overall television pool. Regional and subscription television are growing, and metro is in decline, but total television is up," Mr Fitzgerald said diplomatically.
But he said Foxtel would not be formally joining Ten's Connect alliance, which includes DMG Radio and Facebook, and said MCN was open to working with any media company on an ad hoc basis. "We may remain committed to working with any media partner or more than one media partner on a brief by brief basis if it makes good commercial sense to do so and if it doesn't, we won't."
MCN's network of channels delivered a 4.2 per cent year-on-year rise in audience for the first half of the ratings year, according to OzTAM.
Underpinning bigger audiences were bumper ratings for live sports programming. The highest-rating program on subscription TV during the first half of the ratings year was the NRL Bulldogs v Rabbitohs match on Fox Sports 2, which pulled in 395,000 viewers.
Mr Fitzgerald said MCN's multi-million-dollar investment in its analytics division, Multiview, had paid dividends. Multiview captures set-top box usage and interactions in 10,000 homes to generate consumer insights. "We're in a position now where we can target potential car buyers, not just an age and demographic."
Mr Fitzgerald conceded that apart from the Olympics, pay-TV had not had a ratings hit and cultural phenomenon to match Nine's The Voice and admitted some of the US drama imports were plagued by illegal downloading on the internet, which harmed potential ratings.
