Leading
broker and investment banker, UBS Australia, has raised eyebrows around the
Sydney TV industry with this comment in its Monday morning market commentary to
clients:

We
would not be surprised to see Foxtel waive its bid for
the AFL rights, with Fox Sports the likely replacement. We expect Foxtel would be interested in a revised package structure,
incorporating four live games per week, with an improved mix of quality, and
would only be prepared to pay more than the mooted $38m current cost of the
package for such a mix – however, it seems unlikely that Seven-Ten will offer
the package in this format. It appears the negotiations are at little more than
a preliminary stage currently.

We expect Fox Sports may be interested in
the AFL rights, with Fox Sports 3 perhaps the vehicle for delivery. While this
issue will have to be resolved before the end of the year, we believe that, in
the interests of continuity, Foxtel would prefer to
resolve it well before the finals series begins in September. Our current
forecasts for Seven and Ten assume that “someone” pays
$38m pa for three games per week.

Some wonder whether this is a PBL view –
unofficial of course, given the investment bank is close to the House of Packer
and its former head of investment banking, Chris Mackay, has just gone on the
PBL board.

It’s probably not official and perhaps a bit
misinformed: Foxtel has a habit of negotiating publicly in rights
negotiations. Seven has pointed out in the past that all it
wants is for Foxtel to pay the amount it offered to
pay as part of the Nine bid for the AFL
rights.

The UBS commentary seems to have missed a
couple of points: Foxtel’s penetration is highest in
Sydney and needs AFL supplied from somewhere to
keep momentum going in Melbourne in particular. Not being able to tell viewers before the
end of August that there will be AFL on next year would see a loss of
subscribers in Melbourne.

The advent of Fox Sports 3 indicates that
Telstra will not be financing any more Pay TV programming adventures and that
the other partners, News and PBL, will have to find the money: hence the
appearance of Fox Sports 3 channel which has a big hole in next winter’s
programming.
Seven is reportedly refusing to climb on
board the Federal Government’s media changes and rejecting the curbs on new
digital TV services and not backing the changes to the cross media laws in their
present form.

In their present mood they would see the
News Ltd rejection of the proposed changes without restrictions being lifted on
free to air TV licences and a relaxation of the sports
anti-siphoning law, as more evidence that Murdoch and Packer were ganging up on
Kerry Stokes and his company. Foxtel wants the anti-siphoning rules relaxed. PBL
doesn’t and doesn’t want any new TV commercial TV licences.

Peter Fray

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