The battle over sporting rights has come to a head this week, with
Nine’s deal to move domestic cricket coverage to Fox Sports
representing a major sporting retreat (for cost reasons) by the
country’s leading free-to-air sports TV network. Nine’s move means it
is now out of any future battle for sports rights, unless it’s at a more
acceptable price. Nine just doesn’t have the money to maintain the AFL,
NRL and Cricket.

The
Nine Network signed a huge deal with Cricket Australia last
year, which was driven and shaped by Lynton Taylor, the former Nine executive brought back by Kerry Packer to help David
Gyngell and Nine retain the cricket and the AFL and
the Rugby League TV rights. Estimates value the six-year deal somewhere between $240 and $280
million.

So
within three weeks of the new contract starting, Nine
has flicked a large proportion of its coverage to the half-owned associate Fox
Sports so that Nine can save money. No mention of that at Nine or in the News Ltd media or any other
media for that matter. It’s a
straight cost cut by Eddie McGuire, Nine’s Director of Sport, Steve Crawley and
CFO, Brent Cubis.

Nine
will retain the international cricket, and games like the World Cup matches from
overseas. Foxtel will probably end up sharing those as
well as showing all non-Australian World Cup Games plus all future overseas tours
by Australian teams, except the Ashes, which will be left on the anti-siphoning
list.

Nine is
also looking at ditching or sharing other sports (and cost) with Fox Sports; golf and tennis, like the
US Masters and British Open
and more of Wimbledon and the US Open
tennis, are on the list.

And no
mention
either in the News Ltd press about the relative ranking of the recent Fox Sports soccer deal. Seven’s
AFL deal with Ten is valued at $780 million, Nine’s NRL contract over six years
is valued at $500 million (and will be subjected to cost-cutting by Nine
management to reduce the impact of the 60% increase next year), the Super 14
Rugby Union deal is worth around $500 million, the cricket is worth more than
$240 million (but less now to Nine) and soccer is worth around $120
million. Not the
gold mine to the code that the AFL, NRL, Union and cricket TV deals
are.

Foxtel subscribers will be
financing the $25 million a year that the soccer will cost. They presently
finance the $35 million and $40 million a year paid for the AFL under the
contract with Nine and Ten that expires at the end of
this season. Seventeen million dollars a year in rights fees will
flow to soccer, the other $8 million will be production and marketing
costs. That
sounds a lot, but compared to the AFL it’s not.

For
Foxtel, the soccer and cricket deals are as cheap if
not cheaper than spending millions on marketing to limit customer churn and try
and sign up new customers. It will enable Foxtel to
have a better chance of retaining customers when their contracts are about to
expire. There
are hundreds of thousands of contracts expiring over the next year from the
people who moved early to digital when Foxtel
converted.

Peter Fray

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