Something smells about the elephant's sudden urge to leave the room
Roy Masters
February 15, 2011
At a meeting tomorrow to discuss the orderly transfer of power to a new independent commission, members of the almost lifeless ARL will now sit stunned and perplexed by News Ltd's unilateral announcement it will exit rugby league on April 30. No one can make sense of the date.
Willie Nelson's birthday? The American songwriter's On the Road Again has some resonance, given the multiplicity of dates announced these past two years nominating when an independent commission would begin its rule of the game.
April 30 is also the anniversary of the fall/liberation of Saigon, which depends on whose side you are on, an apt analogy for those who liken News Ltd's 1995 raid on rugby league to the Americans bombing Vietnam.
That analogy fails because the US were the losers in 1975, and News Ltd are the clear winners of the Super League war. It was fought over Kerry Packer's first-and-last pay-TV rights, and Rupert Murdoch now has them until 2027.
The ARL initially gave Murdoch the rights for 25 years as part of the 1997 peace settlement but recently extended them for a further five years in exchange for News Ltd's early exit. ARL negotiators believe it is a reasonable concession, given News Ltd was owed $14.5 million in deferred payments from the early days of the ARL-News Ltd Partnership and is giving up its $8m annual dividend by leaving a few years before its scheduled 2018 departure.
Typically, the 16 NRL clubs, desperate for the extra $500,000 each could potentially receive from News's dividend, greedily agree.
This is an example of the short-sighted, small-picture thinking that has plagued rugby league. First-and-last broadcasting rights are a powerful weapon, particularly if they are all-encompassing, extending past free-to-air and pay-TV to online and mobile telephony.
The AFL broke out the champagne when its $20m first-and-last deal with Channel Seven expired. It was forced to sign with Seven when Kerry Stokes equalled Kerry Packer's $780m offer in 2005, although some AFL executives would have preferred to be with Nine.
Rugby league's first-and-last rights are, in effect, ''lift up your skirts'' clauses, allowing the holder the opportunity of looking at the full detail of the rival bidder's proposal.
While this is important in the bidding for the forthcoming round of rugby league rights, it will be even more critical in the round beginning 2018. As one IT expert said in a text to the Herald: ''The code is sitting on a diamond, gold, silver and platinum mine with the NBN IP [internet protocol] going to 11m homes and Telstra getting an $11b windfall. Plus 15 digital channels.''
So Telstra knows if it bids for all league rights, on-selling two games to free-to-air TV to satisfy anti-siphoning requirements, it must lift up its skirt to News Ltd, showing its rival its secret strategies.
Telstra and News Ltd are in an already fractious partnership in Foxtel, where Telstra holds 50 per cent and News Ltd 25 per cent, although Murdoch holds management rights to Foxtel.
Telstra's T-Box threatens the future of pay-TV, meaning first-and-last broadcasting rights to the most popular product on Foxtel are a lethal weapon in the power sharing that will come out of inevitable discussions between the nation's biggest telco and Murdoch.
Foxtel is in discussions with the second-most popular product on pay-TV - AFL, whose rights expire a year before rugby league's.
Foxtel is seeking to pay less for better-quality games. It pays $55m for the AFL's four worst games a week, while rugby league receives $45m for five games, including the third- and fourth-best games.
News Ltd spins the line rugby league receives more than AFL if a $15m payment from Sky New Zealand is included. Why should it be? In the apples-with-apples analogy so beloved of media executives, this is an apples with kiwifruit comparison. There is no AFL team in New Zealand. It's a separate market.
The AFL broadcasting deal is expected to be concluded in the next 2½ months. The spin from the broadcasters is the AFL will receive less than the $1 billion it seeks, principally because it won't get extra Foxtel money.
If the AFL has to lower its expectations, the signals are the NRL must do likewise when it negotiates for Murdoch-controlled money. And when is this likely? Around April 30, the date News Ltd newspapers announced it will exit, removed from any accusations of conflict of interest.
