By
June 04, 2013
Australian broadcaster Nine Entertainment Co has renewed its agreement to televise Test and one-day international matches of the Australian cricket team on home soil. The broadcaster will pay a total of A$450m (US$436m) over five years – equivalent to A$90m ($87m) a year compared to the A$40m ($39m) a year under its present contract. Local press reports said that Nine was forced to increase its spending for the key rights contract to head off a challenge from Ten Network Holdings. Cricket Australia also sold rights to the domestic one-day competition, The Big Bash, to Ten, for A$100m ($97m) over five years. The rights are currently held by Fox Sports, owned by News Corp. Both deals run from next season (2013/14).
Nine Entertainment is planning to boost the coverage of its free-to-air flagship channel, Nine Network, by agreeing a deal to acquire stations in Adelaide and Perth from regional operator WIN Television. The deal is likely to be delayed until the question of the ‘reach’ rule is decided – media ownership regulation currently stops a network broadcasting to more than 75 per cent of the country’s population. It is reported that the WIN deal was crucial in persuading Nine’s owners, Oaktree Capital and Apollo Global Management, to approve the sports rights investment. The US private equity companies took control of Nine Entertainment in January this year when it was on the verge of insolvency.
The new cricket contract is the latest in a series of rights deals to close in the last year, which have all delivered huge increases to rights holders. While pay TV operator Fox Sports is the main force in sports rights, listed events legislation (called ‘anti-siphoning’) ring-fences main key events for free-to-air TV. The relatively low penetration of pay and a highly competitive TV advertising market, with three commercial networks competing for eyeballs, have helped heat the market up.
Nine secured free-to-air rights to Australian rugby league in a five-year deal which started last year. The total value of the deal is A$1bn ($970m), with Fox Sports sharing the contract. Nine’s main rival Seven secured rights to Australian Rules Football for A$475m ($460m), also from 2012, and recently won rights to motorsport event V8 Supercars. Ten Network recently swooped to secure rights for next year’s Winter Olympics.
According to Free TV Australia, Seven was the market-leading network last year in the five major cities with a 40.2 per cent share of gross ad revenues, ahead of Nine with 36.4 per cent and Ten with 23.5 per cent. Gross ad revenues in the metropolitan areas were A$2.9bn ($2.8bn), slightly lower than the A$3.0bn ($2.9bn) in 2011. Both Nine and Seven increased share of ad spend at the expense of Ten – though the latter’s recent investment in sports is a sign that it is determined to narrow the gap.