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Packing a punch – 1. Active players and buoyant market

Active players

Anti-siphoning protection explains why the country’s free-to-air commercial networks, Seven, Nine and Ten, continue to be such active players in the acquisition of live sports rights.

The state intervention means that free-to-air and pay-television providers often share coverage of premium properties.

In August 2015, for example, AFL chief executive Gillon McLachlan unveiled a record-breaking deal with Seven, pay-television platform Foxtel and telecommunications company Telstra worth a total of Aus$2.5bn (€1.7bn/$1.8bn) over six years, from 2017 to 2022.

Changing anti-siphoning rules would be political suicide by the party

The NRL, meanwhile, generated a total of about Aus$2bn through selling its next cycle of domestic rights over five years, from 2018 to 2022, to pay-television broadcaster Fox Sports, Nine and Telstra.

However, the anti-siphoning rules are not universally popular. Australian pay-television lobby group Astra, which represents players like Foxtel, has described the anti-siphoning legislation as “draconian” and “antiquated.” Astra chief executive Andrew Maiden has previously argued that the rules “starve sports of the revenue they need for grassroots activities and business development.”

However, David Rowe, a professor at Western Sydney University’s Cultural Research Institute, does not expect the rules to be changed any time soon.

“No Australian government has ever come close to changing the rules and I don’t see any indication that this is about to change,” he told SportBusiness International. “It would be political suicide by the party in question.

“There might be an argument for tinkering with the anti-siphoning rules – to help some sports and to prevent the free networks from hoarding rights. But a key problem in Australia is that there is one dominant pay-TV platform – controlled by Rupert Murdoch’s News Corp and Telstra. So getting rid of the anti-siphoning rules would look like politicians supporting media moguls at the expense of the general Australian public.”

Rowe added that any changes could destabilise Australia’s free-to-air model.

“It has become really clear in recent times that live sport and reality TV are propping up the country’s free-TV networks, which is why the AFL and NRL were able to attain such high prices for their live rights. So abolishing the anti-siphoning rules would have a significant impact on their prospects too.”

While there is unlikely to be any shift on the anti-siphoning front, sports-rights expert Colin Smith, managing director of consultancy Global Media & Sports, acknowledged that it is a pivotal time for the Australian sports industry.

“One of the key developments has been the entry of telco Singtel-Optus into the sports-rights market,” Smith told SportBusiness International.

“After not buying any rights for 12 years, it has just acquired live rights to football’s English Premier League, previously with Foxtel. There’s no question Optus’ entry into the sports-rights market has been a call to action for Foxtel.

“If Optus acquired something like the AFL or NRL, it would also need to invest in a production solution, which it doesn’t have to do with the EPL.

“However, it could take a look at other international sports franchises or maybe smaller domestic leagues. One beneficiary of this could be A-League soccer, which may see an Optus- Foxtel bidding war.”

Evidence that Optus is not just interested in the EPL came in October 2015, when the company agreed a sponsorship deal with Cricket Australia – which came loaded with a range of digital content rights. That signals serious intent, according to Smith, because cricket “is the biggest good news story in Australian sport outside the AFL and NRL deals.”

Buoyant market

The market also appears to be buoyant in rugby union.

In December, less than two months after Australia reached the Rugby World Cup final, only to lose to New Zealand, Fox Sports retained rights in Australia for Test matches and tournaments operated by Sanzar, rugby union’s governing body in South Africa, New Zealand and Australia.

The Australian Rugby Union will receive a total of Aus$285m over five years, from 2016 to 2020 – a 148-per-cent increase on the previous rights cycle, from 2011 to 2015 – as part of the deal, which includes the Super Rugby franchise competition.

Meanwhile, Rowe believes that football – and the country’s top-tier A-League, which launched in 2005 – could benefit due to “the profile of the Australian population changing through migration.”

In terms of the overall prospects for media rights in Australia, Jon Marquard, a former Ten Network chief operating officer who is now a director at consultancy Janez Media, told SportBusiness International that there are additional factors that might fuel growth.

“Anti-siphoning won’t change much, but we are expecting media reforms that might make it possible for companies to bid more for rights in the future,” he said. “Areas that might be liberalised include limits on reach and cross- media ownership. You’re not going to see Foxtel acquire an entire free-to-air network, but you might see a greater role for a print player like Fairfax.”

This year, during the 2016 summer Olympics, Seven will be “looking to do things across all platforms so it will be interesting to see how that wall-to-wall free-to-air and digital coverage works out for them,” according to Marquard. He added that the “real prize” for Seven is that its deal will include the 2020 Games in Tokyo, Japan, in a “friendly time zone.”

In Rio there will be hopes of a higher finish in the medal table than the 10th place secured at the London 2012 Games.

“The Australian team didn’t do well at London 2012 compared to its performance over the last couple of decades,” Rowe said. “For Rio it has set itself the target of coming fifth and certainly no lower than ninth.”

 

To continue reading the Australia Focus, please click the links below:

2. Sponsors and city rivalry

3. Challenges and women’s sports

 

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