Packer's swoop on Ten brings good news for everyone - except the viewers, that is.
Roy Masters
October 23, 2010
JAMES Packer's purchase of the largest single shareholding in Channel Ten is bad news for Australia's two biggest football codes and their fans but good news for his media mates.
If Packer shuts down Ten's digital sports channel, One HD, it effectively eliminates one of the reforms the Minister for Communications, Stephen Conroy, planned in his forthcoming changes to the anti-siphoning list, allowing fans of NRL and AFL in the ''developing states'' to watch games live on digital channels.
The AFL is desperate for fans in NSW and Queensland to watch games on free-to-air TV, rather than pay TV, which is available in only 30 per cent of households, particularly with the code's massive investment in two new teams, the Gold Coast Suns and Greater Western Sydney.
Senator Conroy's amendments to the anti-siphoning list would have meant AFL fans in Victoria, South Australia, Western Australia and Tasmania could watch games on a free-to-air network's primary channel, while its digital channel would carry the games north.
Similarly, the NRL, frustrated by Nine's after-midnight coverage of rugby league matches in Victoria, hoped the successful free-to-air bidder for rugby league rights would show games live in NSW and Queensland on its primary channel, while the digital channel would simultaneously carry them south.
AFL fans in NSW and Queensland are forced to subscribe to Foxtel to watch Seven's big Friday night and Sunday games, while Nine won't allow Foxtel to show its NRL games until after they have aired.
If Packer closes One HD, it effectively eliminates Ten as a bidder for NRL rights, given that it doesn't want to suffer the financial hurt of showing low-rating rugby league in prime time in Victoria on its primary channel, in the same way it already suffers with poor audience figures televising AFL into Sydney and Brisbane on Saturdays.
NRL chief executive David Gallop will be disappointed with the possible closure of One HD, given that he met Ten executive chairman Nick Falloon and his lieutenant Grant Blackley recently and welcomed the network as a bidder for NRL rights.
The closure of the high-cost, low-return One HD would drive fans back to Foxtel, where Packer's Consolidated Media Holdings owns a quarter stake, while eliminating a rival to Fox Sports, half-owned by CMH.
Foxtel, owner of AFL pay TV rights which expire at the end of next year, and Fox Sports, owner of the NRL rights, which expire a year later, are two of Packer's most lucrative assets. They will become even more valuable if Telstra, half owner of Foxtel, is forced to sell out.
Packer's $280 million outlay for 18 per cent of Ten, plus board seats and influence over the network's direction, is small change compared with the protection of his potential billion-dollar pay TV properties.
The purchase of a stake in a free-to-air network also enhances his gambling opportunities, should internet betting on live sport be allowed.
Seven and Nine also have digital channels, meaning they could use them to screen AFL and NRL to the ''developing'' states but their existing programming is directed to a non-sports demographic.
News Ltd, quarter owner of Foxtel and the other half-owner of Fox Sports, also gains from Packer's closure of One HD because it enhances the value of its assets.
News Ltd's imminent exit from half-ownership of the NRL will clear one of the barriers to News Ltd increasing its stake in Foxtel, should Telstra sell out. Similarly, Kerry Stokes, who has a quarter share of Packer's CMH while being a part-owner of Channel Seven, gains.
His equity in Foxtel and Fox Sports is now worth more, while Seven has one less rival if it bids for the NRL.
Seven and Ten are contractually bound to bid for AFL together. One can't bid without the other. They onsell four games a week to Foxtel but further changes to the anti-siphoning list will allow Foxtel to bid directly for some games.
News Ltd and Packer, through their ownership of Foxtel and Fox Sports, now have a mesh with Ten in bidding for AFL rights and might be able to extract a better deal from Seven.
News Corporation chairman Rupert Murdoch arrives in Australia in a week's time, and his executives will be keen to deliver good news.
The ARL, his old enemy from the Super League war, will be disbanded at its annual general meeting on December 7, and their chief backer during the conflict - the Packer family - have now enhanced the value of their pay TV assets.
Furthermore, Senator Conroy, who has a toxic relationship with News, has been frustrated in his attempts to deliver more sport to free-to-air TV.