As Cricket Australia enter into negotiations with TV networks for their next round of broadcast rights, we look at the state of play for all concerned
Who currently holds the TV rights and how much did they pay for them?
Channel Nine, which has been the sole broadcaster of Australia’s home cricket internationals since 1979, currently hold the rights for home Tests, one-day internationals and Twenty20 internationals under a five-year, $500m deal struck in 2013. That arrangement is set to expire after the 2017-18 summer.
At the time of that 2013 deal, the Ten network secured Big Bash League (BBL) rights (previously with pay-TV provider Fox Sports) for $20m per season over the same five-year period. Overseas Test and one-day international cricket is shown primarily on Fox Sports, though Nine have the rights to both the Test matches and one-day internationals for Australia’s 2019 Ashes tour of England.
How do these deals compare with those for other major Australian sports?
AFL: a six-year deal (2017-2022) to share games between the Seven network and Foxtel brought the league $2.508bn when negotiations were finalised in August 2015. This was a 67% increase on the league’s previous deal.
NRL: A late-2015 deal with Nine, Fox Sports (TV) and Telstra (mobile) brought rugby league a $1.8bn windfall for its last five-year rights offer.
Super Rugby: a five-year deal with Fox Sports and Ten brought $275m for the right to broadcast the elite club rugby competition and international Tests.
V8 Supercars: in late 2013, the Seven network announced it had lost the rights to the popular V8 supercars series, with the Ten network and Foxtel combining in a $241m, five-year deal for the sport, comprised of $196m in cash and $45m in advertising supplied by the new broadcasters.
A-League: in late 2016 FFA signed a six-year, $346m deal with Fox Sports to show A-League and Socceroos matches. Its previous deal was $160m for four years.
How have ratings and returns on investment fared over the last five years?
The Big Bash has been a ratings hit for Ten and their free-to-air coverage has also undoubtedly brought benefits to CA; the relative newcomer has freshened up the presentation of cricket on Australian TV screens and, like the T20 league itself, pitched it at more diverse audience. But Ten are financially strapped now, and in a markedly different position than last time.
The Nine network are the real question mark, and clearly the key player in the current negotiations. The concern for CA is that Nine might in fact be the only real player. A year ago CA watched with interest the whopping broadcast right increases reaped by the AFL and NRL, but they might have shifted uneasily knowing so much money had already been spent before they arrived at the negotiation table themselves.
In February 2017, Nine CEO Hugh Marks told The Australian: “Cricket is an important foundation of Nine’s business and it gives us a great revenue platform over summer. Would we like to have all of cricket? Of course we would. We think the Big Bash has been a great innovation by Cricket Australia and certainly young audiences are engaging with that format.”
Throwing a cat amongst the pigeons this week was a bold statement from financial analysts UBS that Nine should actually ditch their involvement entirely. UBS estimate that the network is currently losing between $30-40m per year on their current deal, and said in a note to clients: “We think it would seem logical for Nine to enter negotiations with the following mindset: i) more cricket content at no additional cost, or ii) to step away from the cricket contract.”
CA’s executive general manager for broadcasting, digital media and commercial, Ben Amarfio, is presenting a more upbeat outlook for the governing body. “We are not concerned that there will be a lack of interest for our media rights,” Amarfio told Fairfax Media. “Live sport, and cricket in particular, continues to be a premium asset.”
In some senses he is right. Increasingly desperate times for commercial TV make bankable assets like live sport a godsend. CA’s hand is nominally stronger this time around on account Big Bash’s ability to drag fans through the gates and consistently pull a million or more TV viewers each night in summer’s threadbare commercial TV schedule. But the costs associated with producing cricket broadcasts, the crammed schedule, and the dwindling popularity of one-day internationals are a concern.
There was a view within CA when the NRL/AFL were signed that cricket’s five-year value had moved north, close to the $1bn mark. Some would now see that number as fanciful, but a net increase on the last five-year deal is close to a certainty.
Who is in a position to bid for the rights this time around?
This is the dilemma currently concerning Cricket Australia. For all of Ten’s success with the BBL, the network itself is now valued at a market capitalisation of only $170m – significantly less than its current licence value. Such financial duress means the free-to-air network is unlikely to be in a position to buy the BBL rights at the current market rate – estimated by media buyers to be hovering around the $40-60m mark per season. Nine have stated for some time that this time around they want the lot (internationals and the BBL).
To that end, serious counter-bidding is unlikely to come from the Seven Network, who are heavily committed to a host of other sports, most notably AFL. The wildcard, according to Financial Review reports in August 2016, is Optus, the Singtel-owned telecommunications company. Optus has endured a bumpy ride in its early period broadcasting the English Premier League, having paid $189m over three years for those Australian rights.
Optus actually made a small foray into cricket in the past few seasons, investing $15m in a partnership with Cricket Australia’s independent digital media arm for exclusive video highlights content on its mobile devices. The likely scenario for the next round of rights is that Optus will bid for the streaming rights currently held jointly by Nine and CA.
What other factors are at play for cricket’s financial health?
CA’s fortunes are heavily tied to this home broadcast deal on account of the wild fluctuations in revenue from season to season: tours by India and England provide significant riches, others sides represent substantial losses. After CA’s annual general meeting of 2016, ESPNCricinfo reported the governing body was presenting projected losses of up to $68m for the visits of South Africa and Pakistan in the summer just gone.
Though CA is bolstered by significant cash reserves, they term this ongoing challenge “lumpiness of the revenue flow”. The situation is not helped by their current pay-deal stalemate with players, who want to maintain the status quo and take a set revenue share. That storm rumbles on.
CA might also end up disadvantaged to a certain degree by the reduced competitiveness in the market for Asian TV rights, following the merger of Ten Sports and Sony.
Another area CA face a battle is in re-signing key corporate backers in a number of sponsorship categories: they have already lost their Victoria Bitter sponsorship; the Commonwealth Bank has, according to Fairfax, cut their deal from $13m to $4m; and KFC’s lucrative deal will expire at the end of 2018.
There are broader trends at play too, not least rapid changes in TV viewing habits. Millennials, for instance, are now more likely than ever to watch sport via pirated streams. A recent British study found that more than half of sports fans aged between 18 and 24 accessed sport via illegal streams on the internet, and a third of them did so regularly. That number falls off drastically in older age groups, but sporting bodies and broadcasters should be increasingly wary of these sorts of drastic shifts in media consumption behaviour.
An interesting case study is provided by the fate of cricket coverage in England, where the sport has been curtained off from swathes of potential fans for more than a decade following the decision by the ECB to end its free-to-air deal. For every summer following the barnstorming 2005 Ashes series, Test cricket has been shown by pay-TV provider Sky, and there is a widespread concern that generations of potential fans have turned away from the game. The summer ubiquity of cricket on Australian TV screens and the consistently strong ratings for Tests are key drivers of the sport’s ongoing popularity.
What is the most likely result of the current negotiations from a scheduling perspective?
Nine have repeatedly stated that they are open to sharing their rights package with Fox Sports (who would likely receive a considerable number of BBL games), but one thing is for certain: there will be far more Big Bash cricket. A 40-game season next summer and up to 60 games per tournament by 2019 are the current estimates. That places a strain on the international schedule. Whoever wins these rights will want an unprecedented level of input on scheduling.
Expect a push for more day-night Tests, and for BBL fixtures to stretch out into February. What all of this means for women’s cricket also provides a dilemma for CA, who will know that for all their progress in improving pay and conditions for both Southern Stars and WBBL players, the women’s game risks losing momentum without ongoing free-to-air TV coverage.
Will any of this mean I won’t have to listen to Michael Slater and Shane Warne talking about pizza toppings?
Not so fast. However the broadcast rights deal shakes out, it’s unlikely our screens will be free of former players turned pundits. Even if Nine bow out, their key on-air contributors will still probably appear on your TV screen in some capacity.
What is most interesting about the next five-to-10 years is the potential for significant amounts of money to be stripped away from production expenditure for live TV sport – a trend already being felt in the US via savage staff cutbacks at financially-stricken ESPN. It is possible that the days of networks spending millions on the opinions of ex-players are done and dusted, but whether this results in the rise of a different breed of commentator remains to be seen. Don’t hold your breath.
One other word of warning: don’t be surprised if cross-promotions like the infamous KFC restaurant in the sky, or random appearances from cast members of The Block, become more and more frequent. Whichever network/s win the rights will be looking to extract every dollar they can out of the arrangement, and neutralise their costs.