Michael Pascoe writes:

Never mind the footy, in the spinning game
Foxtel, News Ltd and PBL are getting all the free kicks against Seven and Ten over
the pending pay TV rights negotiations. But free kicks don’t necessarily mean

Reading the fish wrappers, a punter might
get the impression Seven and Ten need a Foxtel AFL deal more than Foxtel needs it.
It’s an impression that has caught on with at least one analyst, Goldman Sachs
JBWere’s Lou Capparelli, whose January 6 research note gets a run in the Smage

We believe that Foxtel
is in a good position to extract better terms under the 2007-11 deal than it
currently has. For example, we believe that Foxtel might get the opportunity to
broadcast live and exclusive games in Sydney and Brisbane on Friday nights and
on Sunday early evenings in a “free to air free” window. Foxtel would value
such a deal and it would bring down the free to air cost of AFL for Seven and

However, we expect
that Ten will broadcast matches on a Saturday afternoon, while we expected that
Nine would not. Consequently, the likely absence of a “free to air free” window
on Saturday afternoons means that Foxtel can justify paying less to Seven and
Ten that it would have paid Nine if it did have a marquee Saturday afternoon

Well, maybe…but all such commentary
underplays or overlooks the fact that football is absolutely vital to Foxtel –
as a subscription driver nothing else begins to rate. Just as soccer rights
made BSkyB in the UK, the necessity of AFL and rugby fans paying to worship their chosen
religion is the only thing that allows Foxtel to keep promising it will make a
profit one day. The occasional disaster causes a spike in Sky News ratings, but
aside from that it’s only the live football broadcasts that move the Foxtel
rating meter enough for anyone to notice.

Foxtel and Seven and Ten all need each other,
but when the negotiating gets down to the wire, the bacon and eggs analogy
applies: the pay TV deal for AFL is for Seven and Ten like the commitment the chook
makes to provide the eggs for the dish, while for Foxtel is the commitment the pig
makes to provide the bacon.

And there is another aspect somewhat
overlooked in this deal. There is often an impression that the AFL contract is
part of Kerry Stokes vs The World with 10 making up the numbers. It was
actually 10’s Nick Falloon who took the joint proposal to 7’s David Leckie in
the first place.

Nine had been treating 10 with its usual
arrogance over their existing AFL deal, promising to get even for 10 having the
rights to the grand final. Falloon bet he could do business more reasonably and
fairly with 7 for the 2007-11 contract.
It’s bemusing to see the PBL bully boy culture come back to bite it.

Meanwhile Stokes v World continues.
Capparelli and others speculate that the AFL rights negotiations might provide
a means of settling the mega case. Capparelli’s “outperform” stock
recommendation for 7 is based on hope for positive “newsflow” from the AFL
deal, meaning settling the case and selling Telstra Dome to the AFL for a
decent whack – both of which would improve 7’s bottom line.

But it would be a game analyst to
underestimate Stokes’ determination in this case. And there’s the civic good to
consider – what mischief might all those
lawyers get up to if they’re not kept off the streets.

(By way of disclosure, I am an occasional
paid contributor to various 7 programs and thus might be considered tainted,
like everyone writing in News Ltd papers or on the PBL drip, but on the other
hand I also think AFL is appalling waste of Australian manhood. You know they
won’t get to heaven.)