The TV rights thread part II

[El Diablo]

interesting article in the FIN today although you need subscription to read it on the net http://afr.com/p/lifestyle/sport/nine_debt_gives_weight_to_one_year_Lh7LvE4JwesoqSrm4Ld6DI

Nine debt gives weight to one-year TV deal

just some tid bits from the article

The managing director of media agency Fusion Strategy, Steve Allen, said he recommended that the NRL consider a one-year deal if it could not get the five-year figure it wanted.

“There’s no question given the success of rugby league on television that it deserves a significant boost,’’ said Mr Allen. “Of all the sports, it’s the one deal that doesn’t look fully priced in terms of the ratings it delivers. But with uncertainty about how much Nine may be in a position to bid, I’d recommend they look at signing for one year if the five-year deal looks insufficient.’’

 

[PaddyBoy]

Questions for the guys in the know, what would the difference between shorter term and longer term deals in dollar value? Most sports seem to go for 5 years (around the world). Is this for safety, or do you get more if you sell in bulk and give safety to networks?

 

[Raiderdave]

interesting article in the FIN today although you need subscription to read it on the net http://afr.com/p/lifestyle/sport/nine_debt_gives_weight_to_one_year_Lh7LvE4JwesoqSrm4Ld6DI



just some tid bits from the article

“There’s no question given the success of rugby league on television that it deserves a significant boost,’’ said Mr Allen. “Of all the sports, it’s the one deal that doesn’t look fully priced in terms of the ratings it delivers. But with uncertainty about how much Nine may be in a position to bid, I’d recommend they look at signing for one year if the five-year deal looks insufficient.’’

if the deal looks insufficient ... then 9 are out , & they're F&L rights go with em

7 /10 will be looking to blow them away knowing if ch 9 don't have a ratings staple for Winter anywhere in the country .... then they are finished & will be battling with SBS & the ABC for the wooden spoon for broadcasters

for 9 to survive they need Rugby League
for 9 to die .... 7/10 need Rugby League

its all good ;-)

 

[El Diablo]

agreed

i see this as a possible positive because 9 are f**ked as is and if they lost the NRL they'd really be up the shitter

i don't think Kerry Stokes would lose any sleep over that

 

[juro]

So effectively what you are saying is that 7 have nothing to lose. They bid big and push 9 to the wall. Either 9 beat 7's bid and are burdened with massive debt, or 9 let 7 have it and fall to the bottom of the pile, leaving 7 without any real competition for ratings.

 

[Phil McGrawhan]

Would make me happy,if we got the $$$$ off 7/10 & fox ,& 9 were screwed.
Payback for the treatment of RL over the last few yrs.
I would have no reason to watch 9 ever.

 

[whall15]

Would make me happy,if we got the $$$$ off 7/10 & fox ,& 9 were screwed.
Payback for the treatment of RL over the last few yrs.
I would have no reason to watch 9 ever.

That and every match would be on FTA.

 

[Goddo]

A one year deal would be interesting, but I really can't see that happening.

I can really see a 7 / 10 joint bid or just a 7 bid (although I think a joint bid is more likely) trumping 9s first bid.

Which forces 9 to up their bid or die. Either way its not great for 9, good for RL:

* 9 retain rights but have to pay big for them to match 7/10 bid. Game not split into packages, but first and last rights expire at next deal.

* 9 can't match 7/10s first bid - the game is then split into packages. 9 could then try to retain some of Rugby League by negotiating with the NRL and 7/10. Price could creap up a little depending on how it all unfolds.

First and last rights are in our favour wrt 9. It stimulates competition, which is nice after the shafting we got last time around.

 

[Digga Hole]

So effectively what you are saying is that 7 have nothing to lose. They bid big and push 9 to the wall. Either 9 beat 7's bid and are burdened with massive debt, or 9 let 7 have it and fall to the bottom of the pile, leaving 7 without any real competition for ratings.

The trick is Seven won't want to over pay either as they have shareholders to keep happy. So your scenario is correct, however Seven want to bid as little as possible above the value where Nine will walk away. Its the NRL's job to convince Seven that that number is very high, its Seven job to work out what it actually is, and then add a little bit.

 

[juro]

Talking about having a 1 year deal, would 7 or 10 be interested in bidding for this? I would imagine there would be at least some upfront costs of setting up the new shows. Having 5 years over which to spread that cost is a lot more attractive than just 1 season, with no guarantee of retaining the rights after that.

 

[Goddo]

The trick is Seven won't want to over pay either as they have shareholders to keep happy. So your scenario is correct, however Seven want to bid as little as possible above the value where Nine will walk away. Its the NRL's job to convince Seven that that number is very high, its Seven job to work out what it actually is, and then add a little bit.

Ok, say we get to that point where 9 is out of the running, F&L rights gone.

What potential is there for the NRL to then look at breaking up the game into packages?

Or would we be more likely to see 7 onsell Rugby League to 9 or 10?

After the F&L of 9 is broken, this is where the money is for RL. I'm not sure how the NRL would exploit it though.

 

[bobmar28]

The trick is Seven won't want to over pay either as they have shareholders to keep happy. So your scenario is correct, however Seven want to bid as little as possible above the value where Nine will walk away. Its the NRL's job to convince Seven that that number is very high, its Seven job to work out what it actually is, and then add a little bit.

They have to beat nines bid by 20% to cancel out the first and last rights that 9 has.

 

[Raiderdave]

The trick is Seven won't want to over pay either as they have shareholders to keep happy. So your scenario is correct, however Seven want to bid as little as possible above the value where Nine will walk away. Its the NRL's job to convince Seven that that number is very high, its Seven job to work out what it actually is, and then add a little bit.

7 have to be careful they don't under estimate 9's desire for League , as we've said its their future at stake & they'll find the dosh from somewhere to put in a hefty bid
7 or 7/10 just need to come in & go bang .... a bid 9 has no chance of matching
if its a lot higher then 9's bid ... well .. the upshot is 9 is finished as a player in the market & they'll consider that a price worth paying

 

[Digga Hole]

Ok, say we get to that point where 9 is out of the running, F&L rights gone.

What potential is there for the NRL to then look at breaking up the game into packages?

Or would we be more likely to see 7 onsell Rugby League to 9 or 10?

After the F&L of 9 is broken, this is where the money is for RL. I'm not sure how the NRL would exploit it though.

I'm not aware of the detail, however to break the F&L rights you would imagine that the bids would need to be on a like for like basis.

One way this could play out would be for the NRL to set out their preferred option. This would include a position on all issues such as National Coverage & FTA/Pay split. Bidders would be required to submit their offer for this package and the 20% F&L clause would be linked to this bid.

Bidders would then also submit a second or more bids based on their preferred position. This could include any number of variations to the first including game breaks, differences on national coverage etc. This bid would presumeably be higher than the first.

Bidders may also be required to submit bids based on a break up of games (Origin only, H&A, Friday, Sunday, Monday etc)

If Seven/10 (or whoever) beat 9 by 20% on the first bid then F&L may be gone. It would then be up to whether the NRL would prefer to take the first bid, with it set out as they wanted, the second bid, set out as the stations wanted, or a combination of the package bids, or negotiate something in the middle.

The NRL may like parts of the 7/10 second bid, but not like one particular aspect, and negotiate that out for a different sum.

The NRL may also try to combine the package bids. However due to disynergies in breaking up coverage they may find that any combination of the package bids may be of less value than the first or second bids. Exclusivity (even if only for FTA) does have a value

If the NRL took either the first or second bid from 7, i would think it likely that 7 would then be able to on-sell part of their package to other channels if they so decide. This may happen as 9 may be desparate to get Friday night and 7 may have really wanted Sunday. Any additional value created here would go to 7 not the NRL.

These are a few options, but there could be many more. As you can see there is a hell of a lot of work to be done and many negotiations to be had. Anyone that thinks part time commissioners will be doing this is kidding themselves.

 

[Digga Hole]

7 have to be careful they don't under estimate 9's desire for League , as we've said its their future at stake & they'll find the dosh from somewhere to put in a hefty bid
7 or 7/10 just need to come in & go bang .... a bid 9 has no chance of matching
if its a lot higher then 9's bid ... well .. the upshot is 9 is finished as a player in the market & they'll consider that a price worth paying

Absolutely 7 have to be careful. But they also have to be careful that they don't overpay too much and put themselves in the position 9 are in now.

7 are in this game to make money. Damaging a competitor can be useful, but focusing on this as opposed to turning a dollar can lead to your downfall. If allowing 9 to win the NRL (for a big price) stops 9 from competing in other ways, then this may be the best outcome for 7. There is no doubt 9 are desparate to win the NRL rights.

 

[Digga Hole]

They have to beat nines bid by 20% to cancel out the first and last rights that 9 has.

First and Last rights is only an option. 7 could bid 10% more than 9 and still win if Nine are not willing to then match 7's bid later.

There is a lot of second guessing that goes on in these processes, thats why people like you and I will never know the real detail of the channels internal valuation views on TV rights. If we know, then the opposition know and they can use this.

 

[docbrown]

A one year deal would be interesting, but I really can't see that happening.

I can really see a 7 / 10 joint bid or just a 7 bid (although I think a joint bid is more likely) trumping 9s first bid.

Which forces 9 to up their bid or die. Either way its not great for 9, good for RL:

* 9 retain rights but have to pay big for them to match 7/10 bid. Game not split into packages, but first and last rights expire at next deal.

* 9 can't match 7/10s first bid - the game is then split into packages. 9 could then try to retain some of Rugby League by negotiating with the NRL and 7/10. Price could creap up a little depending on how it all unfolds.

First and last rights are in our favour wrt 9. It stimulates competition, which is nice after the shafting we got last time around.

That's pretty spot - but just to clarify, 7 & 10 won't have a formal partnership. 10 will partner with Foxtel.

 

[beave]

Doc, is that due to the fallout of the AFL drama between 10 and 7??

 

[carlosthedwarf]

10 will partner with Foxtel.

Does that mean Fox Sports commentators on FTA? Hope not...

 

[El Diablo]

Does that mean Fox Sports commentators on FTA? Hope not...

i'd say it means the same deal as what is happening with the AFL and 7 seeing Fox have said they would like that for the NRL too

so Fox would simulcast the same game but obviously with less ads and just use the FTA commentators for non exclusive games