NRL to reap $1.2b from TV rights deal
April 13, 2012 canberratimes.com.au
High five ... the NRL is set to profit from a bumper $1.2 billion deal with Fox Sports and Channel Nine.
RUGBY LEAGUE is guaranteed a $1.2 billion broadcasting deal, with monopoly pay-TV network Fox Sports declaring it won't be beaten for the five-year rights.
Fox Sports' new boss, Patrick Delany, has allayed fears of NRL club bosses his sports production company is complacent about the rights, saying for the first time the company will pay a just, competitive price to televise the code.
''We are motivated to bid strongly,'' Delany said, anticipating strong opposition from channels Seven and Ten.
"Fox Sports still sees plenty of room for subscription growth among NRL fans" ... Patrick Delany, Fox Sports chief executive.
Fox Sports has combined with Channel Nine to retain the rights they have held since the formation of the NRL at the end of the Super League war.
Nine has a first and last hold on free-to-air TV rights while Fox Sports has the same control over the pay-TV rights.
Both broadcasters will retain their opportunity to make a final, rights-clinching bid if their initial offer is not bettered by 20 per cent from a rival.
Because it's anticipated Seven and Ten will require a pay-TV partner to program all eight games a week, club bosses feared the combined Nine-Fox Sports bid would blow any rival out of the water.
Seven televises four AFL games a week, meaning it has limited programming space for rugby league, while Ten is cash poor. However, Nine and Fox Sports are aware cash-rich Seven could make what is called a ''swamper'' offer for all games, knowing it can onsell some to Fox Sports, which needs rugby league to retain subscribers in NSW and Queensland.
Alternatively, Seven and Ten could combine, as they have for AFL rights in the past.
Delany rejected fears the Nine-Fox Sports pact was designed to scare off rivals, pointing out a joint venture bid was outside those rights.
''The 'first' and 'last' are contained in the individual arrangements between broadcasters and the NRL,'' he said. ''Combining with Nine does not enhance or detract from existing rights. The driver reason for working with Nine is all positive - it goes to expanding rights contained in the current deals in order for Fox Sports to give life to new opportunities such as 'all games live' on Fox Sports. It also goes to joint production of games, which may reduce costs.''
Fox Sports, which shows five NRL games a week live, clearly wants to broadcast a further three games concurrently with Nine.
A similar relationship between Foxtel and Seven - achieved with their $1.25 billion AFL deal - has all nine AFL games shown live on pay TV.
It is working well, with Easter Monday's Hawthorn-Geelong game shown on both Seven and pay TV, with 334,400 fans preferring to watch the game on Fox Sports rather than free-to-air TV.
Delany allayed another fear that Fox Sports, having reached near saturation subscription levels in the rugby league states, would not be motivated to pay the same as Foxtel has outlaid for AFL where subscriptions in Victoria, South Australia and Western Australia are significantly lower.
''Fox Sports still sees plenty of room for subscription growth among NRL fans and general sports fans in NSW and Queensland,'' he said. ''While it is true that we have good subscription TV saturation in both NSW and Queensland, when, say, compared to Victoria, there is plenty of growth left, especially if we can get new ways to present the NRL, such as every game live.''
The recently approved merger between Foxtel and Austar opens up opportunities for Fox Sports because of rugby league's strong following in rural and regional NSW and Queensland.
The AFL has significantly less support in regional Australia, which is why the southern code traditionally uses six capital city numbers when it boasts about free-to-air ratings.
Delany also sought to allay fears rugby league is at a disadvantage to AFL because rugby league's broadcasting contract was with Fox Sports, while the AFL is with Foxtel.
Foxtel is half-owned by Telstra, with News Ltd and James Packer's Consolidated Media Holdings each owning 25 per cent. News Ltd and CMH each owns half of Fox Sports.
Fox Sports charges Foxtel for the supply of NRL programming, including the cost of the rights.
Effectively, this means Telstra money goes directly to the AFL for AFL rights, while Telstra money goes to Rupert Murdoch and James Packer for NRL rights.
This arrangement has long been viewed as a means of Murdoch and Packer using rugby league to pay for their outlay during the Super League war, a conflict fought over pay-TV rights.
Delany insists the arrangement is merely historical, rather than conspiratorial: ''When subscription TV was originally set up, Fox Sports was paid on the basis that it attracted and paid for the NRL rights within the fees paid to Fox Sports by Foxtel,'' he said. ''At that stage Foxtel had no AFL rights. When the opportunity came up to get AFL rights in 2002 [via Nine] - Foxtel bid for the rights and created the first Fox Footy channel. In 2007, Foxtel again attracted the AFL rights [via Seven] but asked us to produce the games as it was within our core expertise. The same happened in 2012.''
Recent Foxtel internal research demonstrates that rugby league is vital to the success of the network and, furthermore, there are significant opportunities for growth.
Yet Foxtel will not bid against Fox Sports for NRL rights.
A Foxtel spokesman cited ''commercial in-confidence'' when asked why Foxtel would not bid, and a Telstra spokeswoman said the telco's interests were protected by having a representative on the Foxtel board.
Rugby league players, clubs and officials will have a strong indication of what the game will receive in less than three weeks when Nine and Fox Sports tender their separate first offers, together with a combined one.
The existing $500 million six-year deal will certainly be exceeded but in the unlikely event the top bid falls short of $1 billion over five years, the new ARL Commission will probably insist on a short-term deal, knowing broadcasters demand surety in their planning and programming. They will gamble on this strategy driving the broadcasters back to the negotiating table.
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1.2 milliards pour la nrl
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