Foxtel risks being sent to the sidelines
Roy Masters
May 11, 2011
Now that the AFL broadcasting rights have been decided, an intense battle looms between pay TV and the free-to-air networks for the rugby league rights that expire at the end of next season.
Channels Nine and Ten withdrew from the AFL auction to retain a war chest for the NRL rights, and the successful bidder, Seven, made it clear the network has money left for a code that could become an almost exclusive free-to-air asset.
There is resentment in rugby league circles at the position the Foxtel chief, Kim Williams, took with AFL rights, paying $650 million for five exclusive games a week.
The NRL receives $210 million from Fox Sports for the same number of live exclusive games, yet it dominates the top 100 pay TV programs. Admittedly, this $650 million versus $210 million comparison is the first year of the new AFL contract and the last year of the old NRL contract.
But rugby league bosses believe AFL was favoured on the last contract (2007-2011), receiving more than $10 million a year extra for lesser quality games.
Their wrath should be directed to Fox Sports whose owners, News Ltd and James Packer's CMH, acquired the NRL rights and then sold the programming to Foxtel, half owned by Telstra, for a tidy profit.
But Williams's stance towards the AFL boss, Andrew Demetriou, at the news conference announcing the AFL deal convinced some NRL executives that their code could expect more of the same from the News controlled entities.
The irony, they argue, is mind numbing. The costly Super League war was fought over pay TV rights.
When News finally gained control of the asset, it built the Fox Sports network on the foundation of rugby league. Some analysts project the combined profit of Foxtel and Fox Sports to be $600 million this year, yet much of that is going to AFL.
The last time Williams paid AFL more, he justified it in terms of the AFL's bigger crowds.
What? Don't families subscribe to pay TV rather than go to the game?
He also argued AFL has higher numbers on six capital city ratings, conveniently ignoring rugby league's huge following in NSW and Queensland regional areas.
But he also admitted the higher payment to AFL was designed to attract subscribers in the AFL states, whose uptake of Foxtel was lower than in NSW and Queensland.
But Foxtel risks losing more if its rugby league audience falls, particularly if the NRL sells its Super Saturday games to free-to-air TV.
These three games are shown consecutively from 5.30pm to 11.30pm, relatively cheap entertainment for big families and therefore attract loyal subscribers in Sydney's west and in regional areas.
If these games were sold to free-to-air, along with the Monday Night game, it would decimate Foxtel.
NRL Monday night, which set a subscription TV record last month when 408,000 watched an Eels versus Cowboys game, is a scheduling opportunity for free-to-air networks but Williams will be gambling they will not bid for Saturday nights.
Ten is controlled by Lachlan Murdoch and Packer, who have stakes in Fox Sports and Foxtel.
Seven has two games of AFL to show on Saturday afternoon and night, while Nine has rugby union obligations.
However, Seven may offload two of its four AFL games in exchange for some NRL, while the networks' digital channels offer programming alternatives.
Rugby league will also demand more from Foxtel's half owner, Telstra. Telstra pays the NRL $50 million over five years for online and mobile phone rights, including naming rights to the competition, the Telstra Premiership.
Naming rights to a competition are valued at $6 million a year. Toyota sponsors the AFL.
Telstra is paying AFL three times more than the NRL for online and mobile rights alone.
It has been hard for the NRL to achieve a just price when it has been ruled by News Ltd directors who sit on one side of a table making an offer and then run around the other side of the table to gleefully accept it.
