On Wednesday, ESPN sent out a "bombshell memo," announcing it was laying off about 100 of the U.S.'s "best-known" on-air sports personalities, that "shocked a nation," according to Nick Tabakoff of THE AUSTRALIAN. What prompted this "seismic moment?" One "key factor:" the price paid for sports TV rights. ESPN "outlaid tens of billions of dollars to hang on to its marquee sporting rights" in the U.S. in recent years, paying "way over what many analysts believe those rights are worth." Fusion Strategy media analyst Steve Allen said that the layoffs at ESPN were a "cautionary tale" for Australian broadcasters. Allen said, "There is no question in my eyes that the peak of the market has gone past us for sports rights, both overseas and here. There is now a fact-based decision supporting this contention." The "most important sport in Australia to be a guinea pig for the new rights climate" in '17 is cricket. Global investment bank UBS analyst Eric Choi warned that Nine Network enter the new negotiations with Cricket Australia with a "sensible mindset." Some media skeptics pointed out that UBS is Nine's house investment bank, and suggested the report was "timed to give the network a handy bargaining chip with cricket administrators to drive down the cost of future rights negotiations." One way in which cricket is looking to boost the value of its rights is by "fattening the calf" that is its "one true runaway success story of recent years:" the domestic T20 Big Bash League. With the current climate suggesting the "value of sporting rights globally has peaked," Nine is "likely to exert pressure to reduce the cost of its rights." Allen argued cricket's expectations are "unrealistically aggressive," and a total payment of between A$650M ($486.7M) and A$700M ($524.2M) over five years, including the BBL, is "likely the maximum achievable" (THE AUSTRALIAN, 4/29).
