The share prices of Australia’s major media companies have not gyrated
much during the ups and downs of the recent C7 court case and AFL
rights tender process, but that may change when we get down to the serious
business of the end game.

The Australian‘s John Lehmann had an interesting piece
on Saturday which seemed to imply that the AFL would still like to give
Nine and Foxtel the rights if Seven and Ten can’t deliver on
their programming schedule within 120 days of the deal being signed.

Whilst this is seen in some circles as a negotiating bonus for News
Ltd and PBL ahead of discussions about which games Foxtel will take
from Seven and Ten, the Seven camp take a different view, believing it
further demonstrates the point of their C7 case and could further
increase any damages. If they hadn’t illegally and deceptively colluded
to destroy C7, we wouldn’t have this problem today, is how the argument
goes.

Although News Ltd CEO John Hartigan is keen to settle before he is
dragged into the C7 court case as a witness in mid-February, Seven is
apparently showing no interest at all as mediation talks on 2-3 February get closer.

Goldman Sachs media analyst Lou Capparelli released a report speculating
that C7 could be settled as part of any AFL rights deal Seven and Ten
does with Foxtel. Too right it could but Seven boss Kerry Stokes has
been buoyed by the damage News Ltd suffered from the dramatic evidence
of their executives Ian Philip and Peter Macourt late last year and is
looking for a settlement of $500-$600 million.

Even Stokes must have realised that some of the evidence he and key
executive Peter Gammell gave won’t allow his claim to get anywhere near
the stated $1.2 billion mark.

The most likely settlement will involve the defendants, led by News and
PBL, picking up the entire $250 million legal bill and then
contributing something like $60 million a year from Foxtel or the Premier Sports joint venture for the
pay-TV rights to the AFL for the period 2007-2011.

Kerry Packer’s last corporate move was to force Seven and Ten to pay an
extra $100 million for the AFL rights, but Seven executives are now
saying privately that the C7 court case will force the Foxtel parties
to effectively pay for this extra cash.

The AFL’s churlish attitude to Seven could also see them paying a full
price of more than $150 million for the management rights that Seven
owns at Telstra Dome as a way of contributing to the settlement. After
all, we do still have the odd situation of Seven now being obliged to
pay hundreds of millions to the AFL for the next round of television
rights, when it is still suing the AFL over losing them last time
around.

Stay tuned for what should be some fascinating cliff-top poker in the weeks and months ahead.