Clubs' ploy to abandon Foxtel to get rights value
Roy Masters
July 20, 2011
NRL club bosses meet tomorrow in Sydney, unanimous they must be rewarded at the next broadcasting contract for the high ratings and subscriptions their games generate, even if it means abandoning Foxtel.
While clubs are optimistic competition among the free-to-air networks will deliver the dollars consistent with the code's popularity in NSW and Queensland, there is a growing fear pay TV monopolist Foxtel will not offer the same for NRL rights as it recently did for AFL games.
It is possible clubs will support NRL chief executive David Gallop in a strategy of offering all eight games per week to the free-to-air networks on a short-term basis, shutting out Foxtel until the News Ltd-controlled service realises the disastrous loss of subscriptions such a move would cause.
Foxtel paid AFL a record $650 million over five years for four exclusive live games a week, yet pays the NRL only $42 million a year for five live games a week. Foxtel boss Kim Williams has acknowledged the high price paid - which allows coverage of all AFL games - was designed to increase subscriptions in the AFL states (currently 24 per cent in Adelaide to 27 per cent in Melbourne), well below subscriptions in Sydney (38 per cent) and Brisbane (32 per cent).
While Williams sees less capacity for growth in NRL subscriptions, club bosses believe Fox Sports was built on the popularity of rugby league and they should be rewarded for what they have delivered.
If this involves selling Foxtel's Super Saturday three games and the high-rating Monday night game to the free-to-air networks, with the consequent cancellation of Foxtel subscriptions in NSW and Queensland, this may be the only course to bring Foxtel to the table with an offer that reflects just value. Asked to comment on a future broadcasting package, Gallop said: ''We envisage a mix of FTA and pay at this stage but one thing is clear - we drive subscriptions, we provide 73 of the top 100 shows [on pay-TV]. You can talk about length of games and number of ads being different with AFL but at the end of the day it's about what people sign up for and that's clearly our game. We must get value for that.
''And if we do not, then we need to consider alternatives. If this involves a short-term FTA deal without Foxtel, so be it.''
Gallop said there had been unprecedented lobbying by networks Seven, Nine and Ten: ''The FTAs are currently knocking our door down to show their interest.''
Tomorrow's rare dual meetings of club chairmen and chief executives in Coogee is the first since an independent commission was named.
The broadcasting contract and its flow on effects to club grants and the salary cap is high on the agenda.
Gallop and L.E.K. Consulting's Colin Smith have not been given permission to begin formal negotiations with networks until the commission is in place to ratify the broadcasting contract, but the first meeting of the eight directors of the new ruling body is imminent.
Complicated first-and-last rights provisions with each of the four entities that hold options over NRL rights - Channel Nine, Fox Sports, SKY New Zealand and News Ltd - mean it could take 15 months to negotiate the final broadcasting contract.
Informal discussions to date with network chiefs have delighted the NRL over the interest from free-to-air TV but executives are alarmed Williams prefers AFL because of its superior ''family image.'' Gallop countered with: ''The AFL have had their fair share of off-field image issues.''
Williams also points out AFL games last three hours, compared to the NRL's two, allowing greater opportunity for commercials.
However, Foxtel will not show advertisements after goals, in a deliberate strategy of wooing viewers from Channel Seven for the four AFL games they simulcast. Foxtel also believe AFL's pre- and post-game shows are superior to the NRL.
Smith said: ''The NRL media results for 2011 reinforce the game's leadership position with State of Origin, the three most watched game ever with 3.8 million viewers; critically, pay TV numbers are up 20 per cent; NRL dominates the top 100 shows on pay TV.''
Asked the effect of Foxtel losing rugby league, considering its existing packages force subscribers to buy programs they don't wish to see, Smith said: ''It would be very significant indeed and lead to a major loss in subscribers from pay TV.
''If FTA TV bought NRL for say three years, it could be catastrophic for Foxtel.''
