The battle for TV sports rights
Broadcast: 10/04/2011
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ALAN KOHLER, PRESENTER: Right now the biggest higher stakes game in Australian sport is not out on the paddock, it's being played out among a bunch of suits in corporate board rooms. As Neal Woolrich reports, there's no salary cap in this competition, it's just all in, bare knuckle capitalism.
NEAL WOOLRICH, REPORTER: Just as the on-field action is hotting up, so too a battle is taking place between Australia's major sporting codes. Negotiations for the next round of television rights are in full swing and the stakes have never been higher.
ANDREW DEMETRIOU, CEO, AUSTRALIAN FOOTBALL LEAGUE: Out of these broadcast rights, regardless of the financial result, there will never be a greater reach to all of our supporters throughout Australia.
NEAL WOOLRICH: $2 billion worth of contracts are up for grabs over the next three years. The AFL is first out of the blocks and the talk is the league could be close to signing a $1 billion deal over five years for its free-to-air, pay TV and internet rights.
RADIO COMPERE: Will it be a billion dollars worth, as everybody reports?
ANDREW DEMETRIOU: Well, apparently I'm under so much pressure to do that as well so I'll do my best.
STEVE ALLEN, MD, FUSION STRATEGY: If you asked us last year, 2010, we would have said it's possible. But given the retail sales and the advertising market conditions that we're presently facing, a billion dollars is simply not possible.
CHRISTIAN GUERRA, MEDIA ANALYST, GOLDMAN SACHS: I think it's definitely realistic. Certainly, the big change that we saw in the anti-siphoning list is that pay TV can now bid for rights directly and that's a huge positive. And we certainly think that sports rights or sports content itself is absolutely critical to pay TV and we think they will pay up for it.
NEAL WOOLRICH: Goldman Sachs media analyst Guerra has been crunching the numbers on Australia's main sporting codes. Based on attendances and television ratings, he thinks broadcast rights for the AFL, NRL and cricket will go up. Tennis, however, is likely to stay flat, while V8 Supercars could see the value of its rights drop. The most likely outcome is for the various sports to stay with their current networks, but Christian Guerra does expect Nine to make a late push to pinch the free-to-air AFL rights from Seven and Ten.
CHRISTIAN GUERRA: I think if anything, I think Nine'll be certainly motivated to put forward a very good bid because that will force clearly Seven and Ten to pay up. And if Seven and Ten do pay up for AFL, that clearly means that they are in perhaps a weaker position to bid for something like the NRL, which obviously is a Nine property.
NEAL WOOLRICH: Media buyer Steve Allen also expects the value of the NRL and AFL rights to go up, although he warns that conditions in the retail and advertising markets have been subdued for some time.
STEVE ALLEN: 2009 was the worst recession that the advertising businesses has ever had. It was particularly strongly felt in television. And 2010 was simply a recovery year, recovering all the lost ground. This year, revenue is proving to be very hard to increase for television.
NEAL WOOLRICH: Now, television networks are facing a new challenge, with telcos like Vodafone also trying to get their own slice of the lucrative sporting pie.
JOHN CASEY, DIR. OF MARKETING, VODAFONE HUTCHISON AUSTRALIA: Cricket TV is a great example of content which is really right for some of our customers. We've got a bunch of other content which is appropriate for other customer groups. It's really a matter of making sure we've got a good selection of content which meets our customers' needs.
NEAL WOOLRICH: John Casey says Vodafone's Cricket TV application had 250,000 downloads from iTunes alone last summer.
JOHN CASEY: Look, it washed its face on a stand-alone basis, but the important thing for us is that the customers that downloaded and watched Cricket TV amongst our most valuable customers that we've got. So, that's the main thing for us is having valuable customers.
NEAL WOOLRICH: Another threat to the free-to-air networks is catch up television like the ABC's iView, which Steve Allen estimates could account for up to 8 per cent of nightly audiences.
STEVE ALLEN: People are choosing to take television viewing in a much more portable fashion. They want to view when they want to view and they will use whatever device they have or they're comfortable with in order to view what they want to view when they want to view it.
NEAL WOOLRICH: With the NBN looming there could be a big shift in the value of digital rights over the next few years. Telstra currently pays the AFL around $10 to $15 million a year for its internet rights, still just a fraction of the total broadcasting deal. The trick now for the major sporting codes is to get more money from mobile phones and the internet without seeing a drop off in television revenue.
CHRISTIAN GUERRA: What we will see, though, is the telecom operators are clearly intent on getting great content for PC but also for smartphones and in the future things like tablets will become even more important and they will pay up for that. Absolutely, they'll pay up for it.
NEAL WOOLRICH: While the days of the sporting couch potato aren't numbered yet, new media will play a much greater role in delivering sport in the future. And although it might be more convenient, it almost certainly won't be free.
