Once again News Ltd and its part-owned outlets, Foxtel and Fox Sports, have been caught gilding the AFL lily in a story in the house journal, The Australian.

In a follow-up this morning to the Melbourne Age story yesterday about how there was unlikely to be any AFL on Pay TV next winter, reporter Jane Schulz said:

The AFL would have to negotiate a deal with the pay-TV group Foxtel (part-owned by News Limited, publisher of The Australian) to get the channel on air. Foxtel broadcasts Fox Footy, which is being closed because Foxtel cannot reach an agreement to buy the rights to show next year’s AFL matches from Seven and Ten.

That is of course wrong. Foxtel was always going to close Fox Footy Channel because it wasn’t economic to continue running it at a loss. The channel needed at least four games to have a chance of being economic. Costs were much higher than Foxtel had thought because it didn’t understand the nature of funding the AFL coverage contained in the agreement between Nine and Ten struck at the end of 2001. Foxtel’s costs were suddenly much higher.

And Fox Footy Channel conflicted with the start of the new Fox Sports 3 sports channel from Premier Media Group. Premier Media is half-owned by PBL and News Ltd, which own half of Foxtel.

News and PBL make money out of Foxtel by supplying Fox Sports channels (and several others) to Foxtel. Virtually every subscriber on Foxtel, Optus and Austar has a Fox Sports Channel as part of their subscription package.

It wouldn’t have made commercial sense for Foxtel to be running the Fox Footy Channel in 2007 in competition with Fox Sports 3. Fox Sports 3 will be carrying cricket and soccer in summer but has a big hole in its schedule next Autumn-Spring where the AFL coverage might be.

It was planned that Fox Footy Channel‘s games would fill that hole if it could get agreement with Seven and Ten on four games for next year. Fox Sports can cover the AFL more efficiently than Foxtel can because it can organise its resources better and has more experience.