Why $1 billion is a real possibility

[Ronin]

What is conveniently forgotten is the NRL does everything it can to maximise its ratings. Friday Night is live and pre-selected only 6 weeks out to ensure its a good match up - marquee game.

The AFL has easily the biggest week in week out audience despite that and whilst the NRL numbers are OK if the AFL go live on Friday night it will maintain that lead.

News Ltd bring a lot of unpaid advertising for the NRL. The Daily Telegraph and Foxtel are virtually advertorial vehicles.

Getting rid of News Ltd has downsides and they are going to stay with melb Stoem ,meaning more losses and therefore more ways to cut costs.

Masters never produced a break down of his TV numbers ,they were part of a 'confidential' report. What a joke.

What is conveniently forgotten is the AFL does everything it can to maximise its crowds.

Delayed coverage, draw has biggest Melbourne teams up against each other on special occasions etc etc.

You cannot have it both ways.

 

[chardonnay]

Roy Roy Masters

http://www.smh.com.au/rugby-league/...ll-the-aces-in-new-tv-deal-20100618-ymr0.html

He struggles to understand how a senior corporate would think about the problem, seems to think corporate world is like Rugby but just played with money, whereas corporates are driven by profitability & growth.

Anyway seems AFL is close to what it can get. Seems Roy Roy is in denial about that

I think Roy well understands the corporate view Reg, dont accept your analysis. Its a muddied water that cant be clear until Senator Conroy acts & given Kevin07 is not big on action ....

 

[Barkly St End]

What is conveniently forgotten is the AFL does everything it can to maximise its crowds.

It's called having a successful business model.

 

[Chaz Pendlebury]

What is conveniently forgotten is the AFL does everything it can to maximise its crowds.

Delayed coverage, draw has biggest Melbourne teams up against each other on special occasions etc etc.

You cannot have it both ways.

What is your point and what has it got to do with TV rights?

The point is the NRL is significantly further along the TV-rights revenue maximisation spectrum than the AFL - Sunday night GF, Saturday/monday night pay tv monopoly, 6 week broadcast driven fixture setting, little stipulation on expansion markets etc

The AFL does doctor its draw, that is correct. It may be why attendances are more than double NRL's where as its TV rights money is slightly less than double

 

[Chaz Pendlebury]

On another note, I think the "reset" option of those proposed yesterday by the AFL has potential to significantly increase broadcast revenues

You raise the intensity across the whole season (more meaningful matches in late june early July) and basically guarantee 3 games of top 6 matches in the last 5 weeks to fill the top three "marquee" time slots.

 

[Reggi05]

On another note, I think the "reset" option of those proposed yesterday by the AFL has potential to significantly increase broadcast revenues

You raise the intensity across the whole season (more meaningful matches in late june early July) and basically guarantee 3 games of top 6 matches in the last 5 weeks to fill the top three "marquee" time slots.

Yep - the winners would be Freo who would have more Marquee games. Pavlich, Ballantyne & Stephan Hill would be bigger stars than they are if it wasn't only Foxtel subscribers who could watch

AFL has many of it's top games during the day, maximises crowds, limits ratings. Imagine the ratings if ANZAC day was a night game?

 

[chardonnay]

Industry sources maintain the AFL has underestimated the venom in the free-to-air industry, with Nine's interest being to bid up the price Seven and Ten pays, leaving Ten with no money to launch a strike for the three free-to-air NRL games, which come on the block at the end of the 2012 season.
http://www.smh.com.au/rugby-league/...ll-the-aces-in-new-tv-deal-20100618-ymr0.html

 

[Rob]

A dumb, poorly written article by someone that has no clue about the media industry (or much else).

TV networks don't have a pot of $X to spend on sport. They sit down, work out what revenue they can raise by getting the rights to whatever sport they're looking at, and put in a bid based on that. Irrespective of what they pay for the AFL, that doesn't necessarily mean that they have less money to bid on the NRL, or anything else. Once they've got the AFL rights after going through due process, they'd do the same for the NRL. Work out how much money it's going to bring in, and put in a bid with that in mind.

Sporting rights are paid for by the revenue they bring in, not from some arbitrary pot of money put aside for the purpose.

 

[Fire]

A dumb, poorly written article by someone that has no clue about the media industry (or much else).

TV networks don't have a pot of $X to spend on sport. They sit down, work out what revenue they can raise by getting the rights to whatever sport they're looking at, and put in a bid based on that. Irrespective of what they pay for the AFL, that doesn't necessarily mean that they have less money to bid on the NRL, or anything else. Once they've got the AFL rights after going through due process, they'd do the same for the NRL. Work out how much money it's going to bring in, and put in a bid with that in mind.

Sporting rights are paid for by the revenue they bring in, not from some arbitrary pot of money put aside for the purpose.

I get the impression you don't understand it yourself.

If a company has leveraged itself to pay a lot of money for a product at what would be considered a high risk decision, then they are substantially weakned to do it again. Its why companies who expand too quickly fail.

Think about it. If they payed a lot of money for both the AFL and NRL, then they have put all their eggs in the sport backet, which have significant overlap in schedualing and thus cannibalise returns from each other. The market capitalisation for the seven network before they merged was $1.4 billion before it merged with WesTrac. Take away the value of its other hloldings then double the value of channel seven (as it was only a 50% hodler of it) and you'd have a copmpany thats lucky to be worth $2 billion. You reckon they would be keen to spend their entire company's worth on getting the AFL and NRL? You reckon the financial institutions would be keen to lend them that money to make the investment?

Its not as simple as you make out.

 

[Rob]

I get the impression you don't understand it yourself.

If a company has leveraged itself to pay a lot of money for a product at what would be considered a high risk decision, then they are substantially weakned to do it again. Its why companies who expand too quickly fail.

Sport rights are generally anything but a high risk decision, as you know exactly what you're getting and ratings are fairly predictable. Certainly more so than other forms of TV programming.

Think about it. If they payed a lot of money for both the AFL and NRL, then they have put all their eggs in the sport backet, which have significant overlap in schedualing and thus cannibalise returns from each other.

Possibly, but TV networks work all that out when looking at the revenue they can earn from the rights. It may be that a TV network is unable to exploit NRL and AFL rights as well if they hold them together, but given NRL isn't on FTA on Saturdays I don't really think there is that much of an overlap. Channel 9 managed it well enough to want to bid $165m a year for the AFL rights next time around.

The market capitalisation for the seven network before they merged was $1.4 billion before it merged with WesTrac. Take away the value of its other hloldings then double the value of channel seven (as it was only a 50% hodler of it) and you'd have a copmpany thats lucky to be worth $2 billion. You reckon they would be keen to spend their entire company's worth on getting the AFL and NRL? You reckon the financial institutions would be keen to lend them that money to make the investment?

If it is worth that much to them, why not? Like I said, ratings are pretty predictable and consequently direct revenue is comparatively predictable as well. There is an intangible benefit to sport rights that flow onto other programs (such as news) that is a lot harder to measure, but if they work out that it's going to increase their revenue by more than what they spend, then it's a sound business decision. I'd expect the intangible bnefits to Channel 10 would be pretty high given they also run a 24 hour sport channel. Holding both the AFL and NRL rights would be a massive boost to that.

And it's not like they need to borrow $1.4 billion up front. AFAIK TV rights are paid annually, and they're funded by the ongoing revenue generated by the rights.

 

[Fire]

Yes Rob, ratings are fairly predictable and stable.

However, the VALUE of those ratings are not, especially over the course of five years, and in the current climate.

If the world slipped back into recession and the arse fell off the end of the advertising market again with that much leveraged, then it would be bye bye.

But of course its not just the netowrks decision. They would have to find someone willing to lend them the money to take a risk like this.

If it was as simple as you sugest, then networks wouldnt partner up to buy the rights. Dividing the rights allows the networks to bid more while hedging the risks by only buying 30 or 40% of the rights.

 

[Rob]

Yes Rob, ratings are fairly predictable and stable.

However, the VALUE of those ratings are not, especially over the course of five years, and in the current climate.

If the world slipped back into recession and the arse fell off the end of the advertising market again with that much leveraged, then it would be bye bye.

Of course, but those factors are just as applicable to every content purchasing decision. The thing that TV networks can control - audience - is more predictable for sport. Not necessarily better, but more predictable.

If it was as simple as you sugest, then networks wouldnt partner up to buy the rights. Dividing the rights allows the networks to bid more while hedging the risks by only buying 30 or 40% of the rights.

I'm not suggesting it's simple or without risk. My point was that TV networks don't have $X to spend on sport and that's final. What they bid is directly correlated with the value the rights add to the network.

 

[Fire]

Of course, but those factors are just as applicable to every content purchasing decision. The thing that TV networks can control - audience - is more predictable for sport. Not necessarily better, but more predictable.

No arguments form me on your second sentance.
Your first sentance is flawed as although its true, you are effectivley comparing the risks of high cost sports to low cost alternatives.

I'm not suggesting it's simple or without risk. My point was that TV networks don't have $X to spend on sport and that's final. What they bid is directly correlated with the value the rights add to the network.

I'm not arguing this point. I am arguing this one:

Once they've got the AFL rights after going through due process, they'd do the same for the NRL. Work out how much money it's going to bring in, and put in a bid with that in mind.

Sporting rights are paid for by the revenue they bring in...

It's not that simple. Winning the AFL rights will make it severely more difficult to win the NRL rights on a financial basis. There may not be an $x to spend on sports and thats final, but there is certainly a limit to how much they can spend for their two 24/7 stations.

 

[chardonnay]

Good to read a genuine discussion ! Relevant is the fact that last time the networks tendered, Nine was the highest tender, Seven matched. Thats how the current value was achieved.
The AFL dont have this luxury this time.

 

[Rob]

Good to read a genuine discussion ! Relevant is the fact that last time the networks tendered, Nine was the highest tender, Seven matched. Thats how the current value was achieved.
The AFL dont have this luxury this time.

How was that a luxury for the AFL? It meant that one bidder could wait and see what the offer was from the other network - and they only had to match it. There was no bidding war for that reason.

That's why Channel 7 paid millions for the first and last rights of refusal, and why 10 paid millions to 7 to share it.

 

[Rob]

It's not that simple. Winning the AFL rights will make it severely more difficult to win the NRL rights on a financial basis. There may not be an $x to spend on sports and thats final, but there is certainly a limit to how much they can spend for their two 24/7 stations.

Only to the extent that they can't show it at the same time and that the intangibles associated with having the rights to each league *may* cross over. But then again, having the rights to both may multiply the intangibles - it would mean the network would be the undisputed sports station. If you're Channel 10 (given they have Channel One), that would be worth a fair whack.

 

[chardonnay]

How was that a luxury for the AFL? It meant that one bidder could wait and see what the offer was from the other network - and they only had to match it. There was no bidding war for that reason.

That's why Channel 7 paid millions for the first and last rights of refusal, and why 10 paid millions to 7 to share it.

A luxury because its not in the AFL conditions next time but it is in the NRL.

Its a tender, not an ebay auction.

 

[chardonnay]

Interesting comments by Melbourne Rebels part owner Harold Mitchell:
''The AFL will continue to get bigger income for their content, although it won't always come from the free-to-air TV networks. The free-to-air networks can only form a certain amount, although the advertising industry has increased again.''

& as an advertising industry kingpin, a $bil is on:
Mitchell said the potential for an extra three weeks of play would ensure the AFL reaped $1 billion in the new broadcast-rights deal.

http://www.smh.com.au/afl/afl-news/new-fixture-a-windfall-for-the-afl-20100619-yo14.html

More games on Foxtel.

 

[Reggi05]

.au/afl/afl-news/new-fixture-a-windfall-for-the-afl-20100619-yo14.html[/url]

more games on foxtel.

iptv

 

[zero]

The AFL dont have this luxury this time.

A luxury because its not in the AFL conditions next time but it is in the NRL.

First and last bid rights are not a luxury, they are a constraint. The AFL was FORCED last time to go with 7 and 10. In fact News is trying to get those same rights of constraint over the NRL for 15 years in return for leaving the game to an independent commission.

This time the AFL will have the freedom to go with the best tender, not just on price but on conditions.

(Within the constraints of Conroys review of the snti-syphoning laws, of course)

And if Nine are keen to push up the price 7 and 10 pay for AFL games that is great news.

 

[Rob]

A luxury because its not in the AFL conditions next time but it is in the NRL.

I don't think you understand - if one party holds first and last rights, then the league is more likely to get less, especially where there are only 2 bidders. That's why networks pay a fair bit for that right - because it potentially saves them money.

Its a tender, not an ebay auction.

It works however the AFL wants to run it.

 

[chardonnay]

I don't think you understand - if one party holds first and last rights, then the league is more likely to get less, especially where there are only 2 bidders. That's why networks pay a fair bit for that right - because it potentially saves them money.



It works however the AFL wants to run it.

Okay.

 

[Redb#]

What will help the AFL this time around is definitely the prospect of new media 'stealing' access to games.

As Harold Mitchell (head of Melb Rebels rugby) alludes, new media is providing the spice. Existing players want to protect their content and will pay more to keep the new media folk away.

New media usually pays over the odds to get content.

I wonder if Foxtel with the addition of two new AFL shows (mid season) are doing their best to court the AFL in the current climate of the Fed Govt reviewing the anti-siphoning legislation.
New media also offers instant live access, FTA networks like Seven better watch out given their patethic delayed coverage policy on Friday Night.

Each time CH 7 has gone live with AFL it has blown the NRL out of the water on FNF overall ratings. Remembering the NRL go live each week on Friday night.

Neutral fans wont put up with the delayed crap when the game is half over.

 

[zero]

What will help the AFL this time around is definitely the prospect of new media 'stealing' access to games.

As Harold Mitchell (head of Melb Rebels rugby) alludes, new media is providing the spice. Existing players want to protect their content and will pay more to keep the new media folk away.

New media usually pays over the odds to get content.

I wonder if Foxtel with the addition of two new AFL shows (mid season) are doing their best to court the AFL in the current climate of the Fed Govt reviewing the anti-siphoning legislation.
New media also offers instant live access, FTA networks like Seven better watch out given their patethic delayed coverage policy on Friday Night.

Each time CH 7 has gone live with AFL it has blown the NRL out of the water on FNF overall ratings. Remembering the NRL go live each week on Friday night.

yeah the prospect of alot more live football on TV is one of the best things about the new deal.

the AFL has made noises indicating that it is giving up on its long held principle that going live against the gate on FTA significantly reduces attendances, and it will be be pushing for more live football

my fervent hope is that channel 10 take friday night football from 7 and show it on One HD and 10 live at 7:30 right around the country on FTA every week

 

[Barkly St End]

my fervent hope is that channel 10 take friday night football from 7 and show it on One HD and 10 live at 7:30 right around the country on FTA every week

One HD is definitely the ideal solution for the Northern markets (that don't involved any of their local teams)