The Australian Football League and National Rugby League have been "bluntly warned" by blue-chip advertisers that they will not accept the football codes' "grand plans" to extract up to A$3B ($2.37B) from broadcasters in the next round of rights deals, according to Paul McIntyre of the AUSTRALIAN FINANCIAL REVIEW. In an "unprecedented protest," leading media agency bosses have called time on the codes' "aggression" for hiking up the cost of their broadcast and digital media rights. Agencies are "critical to the TV networks' ability to underwrite their billion dollar broadcast deals" via advertisers, sponsorships and TV airtime agreements. They say advertisers will not accept the "rising cost of backing sport, given the rapid proliferation of alternative digital channels in which they can invest." IPG Mediabrands Global CEO Henry Tajer said, "The AFL, NRL and Cricket Australia are getting to the point that if they don't moderate their aggression for increased valuation on their rights they are going to implode." Tajer's views were backed by other Australian media buyers such as
Carat CEO Simon Ryan, who spends about A$600M ($474.6M) a year on TV. Ryan said the sports deals were "getting out of control." The AFL' s starting position for its five-year contract from '17 has jumped from A$1.2B ($950,000) to about A$1.7B ($1.34B). Ryan: "The sports rights are simply getting out of control and becoming
increasingly difficult for media and advertisers to afford while
supporting other business initiatives." The dilemma for free-to-air TV networks is that live sport "remains one
of the few programming genres that can pull in large TV audiences." In the past, TV
networks have had enough margin in the broader business to "cover the
losses they may make directly on sporting code deals" because of the
audience "halo effect" that live sport brings to the broader network
schedule in cross-promotional opportunities. But that is "seen by many as
waning." MCN CEO Anthony Fitzgerald said, "There comes a point
where the price of sport rights becomes unviable even with the halo
effect." Octagon Managing Dir Sean Nicholls said, "There was always going to be a point at which the rate of [price] escalation could not continue." The AFL and NRL would not comment. Not "all agree." V8 Supercars CEO James Warburton predicted the sporting codes would get their way. Warburton: "Both codes will generate significant increases. These sports right are never just about the sport" (AFR, 5/11).
