So Hamish McLennan's first attempt to revitalise the struggling Ten Network is to get into a bidding war for sports rights such as cricket and tennis and pay wads of money to both sports for entertainment that will cost hundreds of millions of dollars and deliver little in the way of prime-time ratings growth? Nine holds some of the cricket rights, while Fox Sports/Foxtel has others (one-day, four-day and Twenty20 competitions). Seven has the main rights for the tennis, and Fox Sports/Foxtel have subsidiary rights.
The only way McLennan and chairman Lachlan Murdoch can win a major TV sports rights contract is with the financial assistance of News Ltd/News Corp via Foxtel and Fox Sports. Ten is already an affiliate of News, and Murdoch is chairman of the board and owns 9% of the company, supported by three other shareholders with more than 30% between them. More importantly, News Corp controls the most important parts of Ten's prime-time schedule through programs made by Shine and Fox. Getting into a joint bid for sport like cricket or tennis with News/Foxtel/Fox Sports will mean even more of Ten's programming is being paid for or produced, one way or another, by the Murdoch empire, at least in part.
McLennan's first thought bubble about sport is a tired, blokey formula that has failed Ten already. How does McLennan think Ten can make money out of tennis and the cricket in summer and deliver prime-time ratings growth? Seven makes money because the tennis occupies two weeks in January. But the network has invested considerable amounts of money in the promotion, production and sports rights. Nine's cricket does OK, but the big pay-off is the Ashes Tests every four years or so (this summer in Australia).
But Ten isn't making money and won't until it can get its prime-time schedule in order and start delivering decent, watchable programming for viewers, especially the target demographics of 16 to 39 and 18 to 49.That's where McLennan should be looking to invest after his strategic plan, rather than a hairy-chested bid for sports rights (which will deliver mostly male and older viewers, though the tennis does have quite attractive female viewing levels).
And there is another consideration. Talk around TV land is that News Ltd chief executive (and former Foxtel CEO) Kim Williams and Lachlan Murdoch had a major falling out over the NRL TV rights in 2012. Murdoch and Ten made a big play, but the NRL rights remain with Nine, with Foxtel/Fox Sports having the pay TV rights. Murdoch wanted to get into bed with Foxtel/Fox Sports, but the pay TV business has enjoyed a good relationship with Nine in the NRL and the Olympics (though both lost heavily on that adventure), and they share the cricket coverage.
Why would Williams want to antagonise Nine and David Gyngell and abandon them for Ten? That would cruel relations around pay TV's most important sports rights deal, the NRL. Foxtel/Fox Sports do better out of the NRL than the AFL because rugby league has more followers on pay TV and bigger markets in NSW and Queensland regional and metropolitan. AFL has more states covered, but Foxtel and Fox Sports have failed to boost subscribers with the Fox Footy channel and joint live-to-air rights they won with Seven in the current deal.
What McLennan is really telling us that he wants to use News Ltd's resources (via Foxtel and Fox Sports), to rebuild Ten's fortunes by going after older viewers, with an emphasis on males. That's exactly the formula that Ten has adopted with its strategy for its ONE digital channel, which could easily be converted into a sports channel. That was Lachlan Murdoch's idea.
Seven won't let the tennis go cheaply, nor will Nine let the cricket slip from its fingers (it has first and last rights in the cricket, Seven doesn't have that for the tennis). More thought bubbles from the incoming CEO is not a good look. Ten will need every dollar of cash flow this year merely to keep its hand in the TV game. It is shaping up as a tough year for the country's third commercial network.