What will happen when the television rights to Australian cricket expire at the end of 2006?
Did anyone hear the war start? It has, last week. The battle over the
television rights to Australian cricket that expire at the end of 2006.
Tests, one-day domestic and international matches. The best part of
$30-$32 million in annual income for the Nine Network, profits in
profit-starved summer, and valuable eyeballs for the Packer TV and
publishing empires and a steady cashflow for Cricket Australia and the
The current TV contract is held by PBL’s Nine Network and is due to
expire in just over a year’s time. Cricket Australia wants it sorted
out by the middle of next year, where it will run slap bang into the
furore caused by the Ashes series in England being on Pay TV and not
free to air, because no free to air network wants to waste valuable
time in a peak ratings period on cricket and its low audiences,
especially when it will be on Pay TV.
That situation has arisen because of some sharp thinking by PBL and
News, two of the shareholders in Foxtel and who control premier Sports,
which supply the Fox Sports channels to Foxtel. The Pay TV rights for
the England Ashes series is held by Fox Sports, meaning the free to air
broadcast would be devalued by having them broadcast on Pay TV live and
relatively uninterrupted by advertisements.
Cricket Australia is effectively negotiating with a monopoly in Nine
and PBL and while it wants a higher price, it also wants some sort of
partnership to further the progress of the sport in Australia.
Cricket Australia therefore has no way of generating an auction to get
a price bidding war going. Seven and Ten are not interested unless the
price is silly and very cheap and that’s not likely to happen.
Besides Seven has tennis and gold in the summer and if they were to
lodge a bid, Nine has the first and last rights which would give it
little chance of success.
But Seven, if it was of a mind, could make a bid simply to upset Nine
and to prepare the ground for the bidding for the AFL rights next year.
Seven has the first and last rights for the AFL, despite the presence
of Nine and Ten as the broadcasters.
The AFL contract expires at the end of 2006 but the AFL wants it done and dusted by the end of 2006.
Nine and Ten are at loggerheads. Kerry Packer wants the AFL finals for
Nine. Ten doesn’t want to give them up and will walk away if it doesn’t
have the finals, leaving Nine with the AFL broadcast, greater expense,
and having to fit AFL broadcasts in with its Rugby League broadcasts in
the NSW and Queensland markets.
There’s a lot happening and Cricket Australia has to play a ‘long game’
looking to corral Nine towards a deal that helps sort out problems in
the annual Australian cricket program, and also goes someway to
charting a course to fix these problems perceived as existing in the
report from consultants McKinsey and Co.
Hence these stories. Firstly on Friday in The Australian – Testing times ahead for one-dayers – from Saturday’s Sydney Morning Herald about the future prospects for cricket from McKinsey – Cricket cracking at the seams.
For Nine cricket represents valuable ratings, audiences and cash flow
and profit in the summer doldrums, but some at the network see a chance
to boost this by agreeing to some strategic changes in the scheduling
that would help Nine fight hard in the last month in official ratings
in November, where the rival Ten Network now hurts it with the finals
of Australian Idol.
The idea goes something like this. The story in Friday’s Australian
lays out the idea with the elimination of the triangular January
one-day series, the anchoring of test matches each summer to fixed
schedules, such as Boxing Day in Melbourne, perhaps Brisbane a
fortnight before Christmas, New Year in Sydney, Adelaide on Australia
The one-day internationals would be limited to the Australian side and
either the touring side and or one other side in a limited number of
games played well before the tests. The Pura Cup would continue as is,
in and around the tests etc, which is what happens now. While the ING
Cup one day domestic games could be changed to make the competition
shorter or at the start and end of the official season. Consideration
might be made to the 20 over games now popular in England, but that’s
Nine would not be so opposed to that if it could schedule the one day
internationals in prime time on some Sunday, Wednesday nights in
Sydney, Melbourne and Brisbane in November and early December.
They would be proper full strength international games involving the
strong Australian team in prime official ratings time.(they did well,
winning Sunday night (December 5) for Nine with the first game in
Hadlee Chappell Trophy.)
That could enable Nine to charge more for these games for sponsorships,
and more for the tests because they would not be cluttered up by the
one day games.
Nine’s prime time ratings would get a lift (so the thinking goes) and
this would help it drain viewers on two nights a week from Ten. Seven
and the ABC.
If this works then Cricket Australia could get away with asking Nine to pay more money.
By offering games into prime time evenings in November on peak viewing
nights. Cricket Australia and Nine could argue that they are exposing
the game to bigger audiences, more women and ethnic groups( part of the
problems as seen in the McKinsey Report).
One of those win-win situations. But there’s a couple of snags.
Pay TV rights will be excluded(but maybe the ING Cup and the 20 over
games get shuffled off into Fox Sports in some sort of profit sharing
deal involving Cricket Australia). The final could be played prime time
on a Sunday evening on free to air to help keep a lot of people happy.
And the public relations problem about the non free to air broadcasting of the Ashes series in England would have to be met.
The cricket authorities will find it hard to convince the ABC to take
it because the head of ABC TV, Sandra Levy, does not like sport at all.
SBS could be seduced. Nigel Milan is still close to people from PBL and
Nine and wants to play in a bigger league (and they did a sub-letting
deal with Seven on the Olympics).
There could be some subsidisation of SBS’s payments to the Poms for the
free to air rights from somewhere (from Canberra’s latest slush fund?).
So yes, the war is underway, and with all battles, the skirmishes at
the start are small and isolated. But as always the real work goes on
behind the scenes before battle is joined.
So watch for more blizzards of hints, leaks and ‘exclusives’ A good tip
would be the read what appears in the News Ltd papers. After all they
own 25% of Foxtel and half of Fox Sports and have a vested interest in
the right outcome.
But for Nine the chance is there to finally schedule cricket into prime
time at a time in the ratings season that will benefit Nine and
delivery more money.
(Finally, as an aside, why McKinseys? Surely Cricket Australia is alert
to the damage McKinseys and other consultants have wrought in companies
like the National Australia Bank where a string of restructurings and
changes based on consultants reports including McKinseys damaged the
bank, lowered staff levels and led to a sharp rise in costs. Take a
look at this report on a McKinsey-inspired re-organisation at the NAB
in 2003 that thankfully went nowhere because of the forex loses and
board changes – SMH: Bank sets record: 4000 jobs to go
– The Nab was badly damaged by poor report from consultants such as
McKinseys and others, especially in the Information technology area and
in the changes to the structure and staff numbers at the NAB. And,
besides don’t good consultants already know what the client wants to
hear, not necessarily what the client should hear?)