AFANA News - 11/22/2000
Provided by our man in Melbourne, Johnson Leung
Hello fans:
AFL TV rights battle intensifies
Last Tuesday (November 15), AFL chief executive Wayne Jackson has denied a newspaper report that an agreement was imminent over its lucrative
free-to-air and pay-television rights package. Jackson would not even confirm which companies were challenging current rights holder Channel Seven
for the contract, only repeating his earlier hope that a new deal for 2002 and beyond could be announced before Christmas.
He repeated his statement from previous week that there would be no reduction in the number of games shown on free-to-air TV under the new deal,
as had been speculated. “That’s very, very important,” he said. “There will
be four, sometimes five games live on free-to-air television in each market, each week.”
Jackson also hit out again at widespread speculation the number of free-to-air games would be cut under the new deal. “There’s been a lot of press that’s been wrong in fact in recent days,” he said. “The AFL is pleased we’ve got strong competition for our free-to-air rights, our pay rights and our new media rights. We will have as much football on free-to-air television in 2002 as we’ve had in 2000, and consistent with other years.”
And, despite rumours of tension between the two bodies, Jackson said the AFL had a “terrific relationship” with Seven. The Australian newspaper reported on Tuesday that Channel Nine, Channel Ten and pay-TV operator Foxtel has won the Australian free-to-air and pay TV rights to AFL matches from 2002 to 2011 inclusive. Although club presidents denied the figure was as high as the reported A$500 million, they gave the agreement the thumbs up, as details of it were outlined to them at an information meeting in the new AFL headquarters at Melbourne’s Colonial Stadium. One club president was quoted anonymously as saying: “We’re all going to do very nicely out of it.” However, The Australian’s sister paper, the Melbourne Herald-Sun, only said the clubs were advised the Internet and broadcast rights deals were close to completion. The deal is believed to consist of around A$10million from Telstra for Internet rights, free-to-air of A$50 million, pay-TV of A$20million and contra deals worth A$20 million involving, in part, News Limited, Australian subsidiary of Rupert Murdoch’s News Corporation and publisher of The Australian and Herald Sun. All up A$100million a year, or A$1billion over 10 years.
Whoever wins the rights will have to agree to the demands of AFL chief executive Wayne Jackson, whose priority has consistently been expansion into the rugby league strongholds.
Features of the deal may include:
The Australian said the joint bid was pulled together by AFL commissioner Graeme Samuel.
As reported last week, Seven has been shaken by the renewed bid and referred the matter to the Australian Competition and Consumer Commission over
concerns it may be an abuse of market power. But industry sources said the Australian Federal Government’s anti-siphoning legislation would make it
difficult for a joint free-to-air and pay deal to work. According to the 1995 legislation, key sporting events such as AFL
matches must be offered to other free-to-air networks before the rights holder can on-sell them to pay operators.
Channel Seven’s arguments:
It is believed Foxtel has made initial contact with Ten for that station to televise the live games that Nine cannot. It is believed it is this factor that has strongly influenced the AFL Commission in its latest talks with Nine and Foxtel. The Nine-Foxtel offer is more attractive because not only is its monetary bid substantially more than Seven has been prepared to negotiate, Foxtel has a much greater share of the pay-TV market and greater penetration in NSW and Queensland, still considered frontiers by the AFL Commission. But Nine’s ability to show as much free-to-air live football is restricted by its involvement with rugby league, which is still popular in both states despite the Super League debacle of recent years (involving Rupert Murdoch and TV coverage). With few exceptions there are no league games shown live on free-to-air television. The network traditionally annoys viewers when Ashes tours (the quadrennial Australian cricket tour of England from June to August, next in 2001) coincide with Wimbledon, resulting in reduced coverage of both. Seven’s effort is not good either. It has stubbornly resisted live AFL coverage in Sydney and Brisbane on Friday and Saturday nights in favour of antiquated movies. Most recently last season’s blockbuster round 20 clash between Essendon and Carlton was relegated to a post-midnight finish. That is where Channel Ten, which has saturated coverage of motorsport (except Formula One, still held by Nine) but no other major sport during the year, fits into the picture. Under the plan ready to be put to the AFL, Ten would have the opportunity to pick up the coverage that Nine could not, including any finals match that clash with rugby league finals series. Nine will broadcast the AFL Grand Final (as well as the rugby league Grand Final), semi-finals and grand final of the Ansett Cup, the Brownlow Medal Count, the All-Australian Team ceremony and post-season matches (including the hybrid International Rules series between Australia and Ireland until 2005).
Nine’s preferred position is to telecast AFL football on Friday nights with some freedom to cover games on Saturdays and Sundays. What product it could not cover may be offered to Ten. The ABC, presently undergoing severe budget reviews, is not being considered. But Ten, languishing in third position in ratings after its highs of 1980s and near-collapse in early 1990s, has been active recently in building its portfolio and needs to bolster its Australian quota. For the AFL a Channels Nine and Ten mix would deliver it more than 50 per cent of the TV audience.
It is a scenario that supports AFL chief executive Wayne Jackson’s statement in his press release that there would be no reduction of free-to-air coverage in any new media rights deal. The AFL is known to be disappointed with comments made earlier this year by Channel Seven Melbourne managing director David Aspinall when he said he believed there was too much free-to-air football and that the station would look to reduce it in the future. Channel Seven was also the driving force behind the huge reduction in live Ansett Australia Cup coverage next season cutting coverage from 27 games to as few as 11. The AFL Commission was also disappointed that Channel Seven has backed the move for rugby league team Melbourne Storm to play out of Colonial Stadium, the AFL’s new home ground, from next season. (Seven and News Limited, subsidiary of News Corporation, has interests in the stadium. The two companies also jointly operate the AFL official website.)
AFL could be forced to split rights
The AFL could split its broadcast rights to maximise profit and offer separate packages to both Seven and Nine. This is especially likely if
Seven cannot match the bid of the joint Nine-Channel Ten-Foxtel-Telstra consortium but the AFL is reluctant to sever totally ties with its network
partner of 44 seasons. Such a ploy would see continued on-screen competition between the two
major players thus ensuring coverage of the highest quality. A similar model already exists in the United States for its National
Football League. Three seasons ago ABC, CBS, ESPN and Foxtel paid a combined A$30billion for the joint rights over 10 years. At the time the
amount was considered outrageous but it has proven appropriate for all parties. NBC withdrew from the bid because it could not afford to pay for
the rights after it paid billions of dollars for US TV rights to the 2000 Olympic Games in Sydney.
For the AFL, giving part-coverage to Seven and Nine is no more illogical than a split involving Nine and Ten, which has reportedly been proposed by
the joint consortium. Seven could have Friday night and Sunday’s double-header with Nine
covering Saturday afternoon and Saturday night. Importantly, that arrangement would not interrupt Nine’s rugby league commitments in New South
Wales and Queensland, where its Sunday afternoon rugby league coverage still outrate Seven’s AFL telecast.
Waverley Park could be part of TV rights deal
Waverley Park in Melbourne’s south east has become a key component of the AFL TV rights war -- with the mothballed stadium likely to be sold to
the network winning the rights.
The abandoned arena may be host to AFL matches again -- even if the successful buyer cannot overturn Victorian heritage laws and develop the
site. AFL chief executive Wayne Jackson has insisted those laws can be overcome.
Network sources said the AFL would want to include the sale of Waverley in the TV deal because it was not obliged to share sale proceeds with clubs
and players. Under AFL media rights rules, players and clubs must receive 85 per cent
of the cash price paid for the television rights. If, for example, the AFL were paid A$40 million for Waverley as part of an A$80 million deal, it
would keep A$46 million of the overall payment.
Seven is committed to football: Stokes
Channel Seven chief Kerry Stokes has personally stepped into the fight for the AFL media rights by reassuring staff that the network remained
devoted to broadcasting Australian football. In a memo sent to all staff late Tuesday afternoon, Stokes said Seven
had a four-decade commitment to Australian football: “I am personally committed to that partnership.” He also said that the AFL negotiations were
as significant as those of the Super League in rugby league five years ago.
Stokes’ response follows an AFL club presidents’ meeting on Monday where the league executive briefed the 16 clubs on a $100 million a-year offer to broadcast football on free-to-air, pay-TV and the Internet from rival networks Nine and Ten, pay-TV company Foxtel and Telstra. While Seven executives are upset that the AFL has given the network no indication of a deadline for the negotiations for the new contract, AFL chief executive Wayne Jackson told the presidents on Monday that the new deal was expected to be finalised by Christmas. Stokes’ memo is the strongest stance taken so far by Seven’s executive chairman. Only four months ago Channel Seven walked away from negotiations with the AFL claiming if it could not have all the media rights -- free-to-air through to internet -- then it was not interested in bidding at all. “While I have learnt over a period of time not to try and negotiate in the press, I want to assure you that the Seven Network remains committed to building on its partnership with the AFL,” Stokes said in the memo. “The AFL’s decision, as custodians of the game, on future television rights will be as significant as the Australian Rugby League and Super League decisions of five years ago. The decision will determine whether or not the AFL meets the challenge of a changing communications, sports and entertainment world."
“International experience shows that continuity of agreements between a sport and a television network is the single most important factor in the success of a sport. Whenever a sport changes television networks, the result is never an unqualified success. As you know, Seven’s commitment to Australian football spans more than four decades. I am personally committed to that partnership.”
Stokes said Seven's right to pitch the final bid in the negotiations, an advantage for which the network paid the AFL A$20million, should not be ignored. “Contrary to what you have read in the press we believe that, as has been the case throughout our partnership with the AFL, we will demonstrate our ability to deliver a superior proposal to the AFL,” he said.
Stokes’ memo was made as shares in the broadcaster plunged 6.5 per cent on concerns that Seven would be forced to pay a high price to retain the free to air and pay TV rights. Seven’s shares hit an intraday low of A$6.50 before recovering to end the day at A$6.59, down 35.8c on the day. On Thursday, Stokes told shareholders at annual general meeting of the Seven Network that the company remains committed to its partnership with the AFL. Seven will demonstrate its ability to deliver a superior proposal to the AFL, but ultimately the decision on the AFL’s future rests with it, Stokes said. “But, as a company, our proposal will reflect our business imperatives over the coming decade, our focus on strengthening shareholder value and profitability and the long term relationship with the AFL and opportunities for both Seven and the AFL with the introduction of digital television, and the continued expansion of C7,” he said.
Mr Stokes said this was especially the case given recent court judgements and rulings from the ACCC which confirms Seven’s right to access
for its C7 channel on the Foxtel platform. “Should the AFL decide not to continue our partnership in 2002, the
company will undoubtedly see an increase in profitability - but at the cost of one of its future drivers,” he said.
Nine to target female audience if it wins the rights
Channel Nine wants to entice more women to watch AFL if it wins football coverage from Channel Seven.
Nine star, AFL commentator for Triple M, and Collingwood president,
Eddie McGuire said the super-successful The Footy Show, shown on Thursday nights during the season, had shown that women tune in if the program was
right. “My vision for coverage of football is in line with what we created with The Footy Show and that is for people who are not devotees to fall in
love with the game,” he said. “Women are 50 percent of the market and what we need to do is to make sure more women get an opportunity to get exposed
to footy. And there are ways to do these things.” (The Footy Show has a high percentage of young female viewers mainly because of the appeal of
former Geelong star and McGuire’s colleague Sam Newman. Newman also works for Triple M.)
McGuire said he wasn’t aware of how Nine’s bid -- reported to be up to $100 million a year -- stood with the AFL, but predicted a massive windfall
for all clubs. He said debate on any conflict of interest he might have was not an issue.
He said the AFL Commission was dealing on behalf of the clubs for the TV rights and the sale of Internet rights, probably to Telstra for about A$10
million, would mean more money for the clubs. McGuire would receive money if Sportsview -- the manager of Collingwood,
Carlton, Hawthorn and Western Bulldogs sites -- were employed to manage all club sites.
AFL rights more than money: Nixon
Leading player agent Ricky Nixon has called on the AFL to consider more than money when it awards its lucrative television rights, saying it was a
great opportunity to dramatically improve football coverage. While the bulk of a potential windfall from the deal will ultimately end
up in the pockets of the game’s best players, many of whom are with Nixon’s Flying Start management company, Nixon was urging caution.
“The thing about the TV rights at the end of the day is it’s not just going to be about the biggest dollar,” he told a business luncheon at
Colonial Stadium. “We need to develop the game, we cannot just worry about the dollar.”
Nixon’s comments came as Australian Federal Treasurer Peter Costello bought into the issue. Costello, who is the number one ticket holder of reigning premier Essendon, said he hoped football fans would not be disadvantaged by any possible changes to broadcasting rights. He said it was a commercial decision for the AFL, but he hoped matches would remain easily accessible on free-to-air television.
“I hope that the ordinary football punter isn’t cut out because it goes on pay TV or the internet,” Costello told Melbourne radio station 3AW.
Nixon said the winning broadcaster had to update football coverage to ensure new fans were introduced to the game. In particular he said there
needed to be more focus on football’s biggest attraction, the players.
“The AFL and its broadcaster need to enhance and develop the characters of the game,” he said.
“We’ve got to move on, we’re now into the millennium and we can’t keep
thinking we can broadcast televised football and the way players go about the game the same way we did yesterday.
There are so many different ways to market our champions.”
Nixon said the successful broadcaster needed to come up with clever, funny programs to help increase the game’s popularity similar to Seven’s highly successful “The Dream” during the Sydney Olympics. (Johnson’ note: The program, hosted by comedians Roy Slaven and H.G. Nelson, received a lot of attention from foreign media organizations working in the Olympic precinct for its comical look at Olympic issues and was once reported on the NBC Nightly News back in the US. After the report appeared, many overseas athletes wanted to appear on the program but only a few made it, including Gary Hall Jr. and Pieter van den Hoogenband. Former sporting greats Nadia Comenici and Billie Jean King also made appearances, reading Olympic news.)
Seven may sue Foxtel for damages
Kerry Stokes said on Friday the Seven Network could sue Foxtel for damages if one of the factors behind its loss of the broadcasting rights to
the game was its lack of pay-TV coverage. Seven distributes the AFL on its C7 sports channel through Optus and
Austar, but it does not have carriage on Foxtel despite winning several court cases giving it access to the Telstra network, which Foxtel uses. The Nine-Ten-Foxtel-Telstra combined offer for the pay-TV rights
guarantees to on-sell any subsequent AFL pay-TV service to Foxtel’s rivals, Optus Television and Austar Entertainment, giving the code distribution on
all Australian pay-TV platforms. Stokes has previously flagged he may sue Foxtel for denying access, but
now says he may have an extra claim if that also means Seven loses the AFL rights. He would not reveal the extent of damages to be sought but said,
“we can substantiate some impressive numbers”. He also admitted C7 would have a “very limited future” without the AFL rights. Stokes said at the network’s annual general meeting in Sydney that Seven
would fight to keep the broadcasting rights to the AFL, which will receive final bids for the rights over the next fortnight. A back-up plan for future
strategies was in place, he said, but he would not reveal details.
“…as a company, our proposal will reflect our business imperatives over the coming decade,” Stokes said. “Should the AFL decide not to continue the partnership in 2002, the company will undoubtedly have a measurable increase in profitability.”
But Stokes said this profit increase would be to the detriment of a sporting coverage that was central to Seven’s future plans. He pointed out that he would not jeopardise shareholder returns just to keep the AFL rights. Stokes acknowledged the strength of the rival AFL rights bid, and it would be difficult for Seven to retain the rights, but he believed Seven could deliver a superior proposal. Stokes said Seven’s best hope of keeping the rights beyond next season was to offer a long-term solution. Stokes said he had “an excellent relationship” with the AFL and expected a fair hearing and the opportunity to demonstrate Seven continued to be its best partner. Stokes said if Seven lost the rights, its state-of the-art digital studio adjacent to Colonial Stadium would operate as a separate business venture.
Meanwhile, the Melbourne Cricket Club and the Melbourne Cricket Ground Trust want a slice of the television rights and have announced they will
“move vigorously” to protect their interests. They want a percentage of any
fee the AFL receives for future television broadcasting rights for Australian rules matches at the MCG.
They say the AFL has offered a flat fee, conditional on the MCC and MCG allowing a controversial A$2 levy on every adult supporter at MCG matches
from next year. But MCG Trust’s chairman, John Wylie, said neither the amount offered nor the levy was acceptable.
The AFL has said the levy would go towards the redevelopment of the ground’s northern stand, but Wylie said it would cover at least 75 per cent
of the broadcast access fee offered by the AFL. Wylie refused to rule out court action to prevent a media deal being
completed by Christmas and said the dispute could threaten next year’s matches at the stadium.
MCC and MCG Trust chiefs meanwhile met bosses of Seven, Nine and Ten networks in Sydney on Monday to discuss access rights to the MCG.
Walls switches from Nine to Seven
Robert Walls has quit Channel Nine for Channel Seven in one of the most significant moves yet in football’s TV rights war. The defection is a big
blow to Nine, which was seen to be leading the race for the rights to televise AFL from 2002.
Walls, a respected commentator on The Age, 3AW, Channel Nine and pay-TV channel C7, made his decision after talks with Channel Seven on Thursday.
The former Carlton premiership player and premiership coach (he also coached Richmond and Brisbane) told Nine on the weekend.
Walls, 50, will join Seven’s Friday night commentary team of Bruce McAvaney and Dermott Brereton, and Rex Hunt’s Sunday Footy Show panel. “Channel Nine has been good to me, but Friday night footy is one of the
prime times of the footy week,” Walls said. “It will be a great experience to work with Bruce, who is one of the real professionals.”
Walls’ move is a big blow to former Hawthorn premiership full forward and now multimedia personality Jason Dunstall, who not only lost his
commentary spot on Friday night football coverage, but also been dumped as a member of Seven’s football preview program “The Game”.
The bidding process begins
The AFL has begun to alert all parties bidding for the code’s multi-media rights on the protocol and timetable for a decision on the A$100
million-a-year deal (now believed to be worth A$80 million. The tender process reportedly requires long-time broadcaster Channel Seven to make its
first formal presentation and offer for the rights. Other bidders will then make their counter offers.
The best counter offer will then be shown to Seven’s negotiators and the rest is up to them. They can match it or walk away.
The bidders have been told the rights will go under the hammer irrespective of whether the AFL can settle its outstanding dispute with the
MCC over TV access at the MCG (see story below). That matter, to cost the AFL a pretty penny, is near closure but the AFL told the club presidents
last week to first expect a signature on the TV rights contract. The AFL is believed to have imposed a Friday deadline on the rival bid
for its broadcast rights from the Nine-Ten-Foxtel-Telstra consortium. Seven will then be given two weeks to decide whether to match the offer.
On Tuesday, the 16 club presidents met with the managing director of Seven Melbourne, David Aspinall, and Seven’s Melbourne head of sport, Gordon
Bennett, to discuss Seven’s offer. Speculation has also mounted the Nine-led bid might be partly based on
the TV ratings and pay TV subscriptions generated by the television broadcasts. The higher the TV ratings and the greater the pay TV
subscriptions, the more the AFL would receive, it was suggested. An AFL spokesman said the league would not comment on either issue.
It has also emerged that the owners of the Channel Nine stations in Adelaide and Perth, Southern Cross Broadcasting (which also owns 3AW) and Sunraysia Television, would be substantial financial contributors to any bid. While the Seven Network dominates Perth’s TV ratings, the ratings war in Adelaide is more competitive, despite Seven’s support of rival AFL teams, the Crows and the Power. Trevor Bywaters, the media group head of Adelaide’s largest advertising agency, Young Rubicam, said the Nine and Seven networks fought a daily battle for TV ratings.
Meanwhile, the ACCC is expected this week to reveal its preliminary view on how the rival bid might affect competition in the free-to-air and pay TV
markets. Any negative view could scupper the Nine-led offer
That’s all for today. See you soon.
Regards,
Johnson
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