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Volume 6 No. 235
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Sports Rights Have Reached 'Tipping Point' In Australia, Seven West CEO Worner Says

Seven West Media, which owns the Seven Network, "has taken aim" at sporting execs, saying that TV networks cannot keep "forking out more and more money" for Olympics and Australian Football League broadcasting rights, according to Jeff Whalley of the HERALD SUN. The network on Wednesday ­revealed it "made further cutbacks to counter the costs of its AFL package as it swung to a full-year loss" of A$744.3M ($587.2M). Seven West CEO Tim ­Worner said that the cost of getting the rights to the best sports was now at a "tipping point." Worner added, "Sports rights are undeniably valuable, but free-to-air broadcast also brings incredible value to these sporting codes. Given changes in the market, price rises are not sustainable. I think it's fair to say that sports rights have reached a tipping point in this country." He also said that future negotiations would need to reach a ­position "where the economics stand up for all parties" (HERALD SUN, 8/16).

NO FEEDING FRENZY: In Sydney, Adrian Proszenko reported Global Media & Sports Managing Dir Colin Smith, who previously helped the National Rugby League, AFL and Australian Rugby Union broker media deals, "echoed the view" of Worner. Smith said, "The broadcasters' costs are rising and by acquiring content such as AFL and NRL they're not getting more revenue. That's not sustainable long-term. Then you have the issue of whether one of the free-to-air networks survive, and if it does, in what form? It's not like there's a feeding frenzy out there attempting to acquire rights." Smith added that the "only way the NRL could ensure an increase in its next deal was by adding premium content." He suggested a team in the Brisbane or southeast Queensland regions could achieve this. Smith: "If you're not increasing your television audience, and therefore making yourself more attractive, how can broadcasters continue to pay more money? It's not possible" (SYDNEY MORNING HERALD, 8/16).

DYNAMIC MARKET: The AUSTRALIAN FINANCIAL REVIEW's Max Mason reported while Seven is forecasting the "overall TV advertising market will improve" in '17-18 compared with the previous year and is targeting greater revenue share, the advertising market "remains a challenge for free-to-air TV." Worner said, "I think it's a pretty safe assumption that we're not operating in the same market as we were even as recently as three years ago." His comment on sports rights "will be of concern to Cricket Australia," which has begun informal discussions for its next broadcast rights deal, which will begin in Oct. '18. CA is expected to put tender documents out later this year "with a view to clinching a deal by the end of summer." Nine Entertainment CEO Hugh Marks "struck a similar tone to his Seven counterpart with regard to sports rights." Marks said, "We need to look at the financial return on all the different forms of the game. Cricket is Nine, Nine is cricket. It would be a big decision for us to walk away from that summer of Australia. But all of those things we'll have to consider hard because it's a financially challenging environment and we need to be very disciplined about our decisions" (AFR, 8/16).

VIEWING PATTERNS: In Sydney, Darren Davidson reported a "boom in sports rights locally and around the world reflects new viewing patterns in the TV industry." Viewers are "watching more programs on-demand, skipping the ads, underscoring how live sport is immune to changes in viewing patterns." New competitors such as Optus are now vying for the same rights as TV networks to package them with broadband and mobile services. This has "driven up the prices the networks pay for rights" (THE AUSTRALIAN, 8/16).