AFL Signs New Deal with Telstra

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by Johnson Leung,reporting for AFANA from Melbourne and Rob de Santos, reporting from the USA

Telstra has signed Australia's biggest "new media" content deal ever with the AFL, paying A$60 million over five years for the exclusive right to show match footage on mobile phones and the Internet.   This likely means increased costs for North American subscribers to the AFL web site. 

The deal was announced as part of Telstra's major strategy update and the start of a major expansion of high speed Internet access in Australia.    Telstra's BigPond internet service will offer customers (including presumably viewers outside Australia) full match video replays 12 hours after the final siren, instead of 24 hours after the game currently.  It will also offer video highlights during and after each quarter, extended match highlights, video downloads that can be transferred to portable devices, and special features such as Fantasy Football, trivia, tipping, a ladder predictor and content from the clubs.  It was not clear from the announcement if the quality of the video would be improved over current offerings.   The poor quality has lead to widespread illegal distribution of the video of AFL matches via methods such as BitTorrents.

Content will be available on BigPond and Telstra's new 3G broadband mobile network "Next G", which boasts 12 channels of Foxtel television, sport and movie downloads. Telstra says "Next G", turbo-charged with high speed downlink packet access (HSDPA), is more than 100 times bigger geographically, up to 50 times faster than dial-up, and up to five times faster than other 3G networks. Telstra customers will experience network download speeds averaging 550 kilobytes per second to 1.5 megabytes per second (Mbps), and peak network speeds of up to 3.6Mbps, increasing up to 14.4Mbps early next year.

BigPond managing director Justin Milne said "Next G" users would be able to access the AFL content via BigPond on mobiles, PCs, laptops and other devices. Milne said AFL fans would benefit from Bigpond expertise in delivering online and mobile content "across more devices and with new levels of interactivity". Milne said Telstra will also expand the content range - particularly video - to non-BigPond customers.  Both the AFL and Telstra were silent on the impact this new contract would have on subscribers of the AFL site living outside Australia.  

AFL chief executive Andrew Demetriou welcomed the agreement, saying it extended a partnership that had seen traffic to the website rise steeply, with unique users averaging more than 707,000 each week - up 50 per cent on the 2005 season [Ed. note:  press statements did not make clear if this was an average or for what specific dates it was measured.  This matters as, for example, AFANA has higher traffic levels during the lead up to the Grand Final.]   Demetrioiu said "We think this is a good deal for the football industry and a great partnership for football supporters whose appetite for the game continues to grow," adding footy fans would welcome the opportunity to access as much timely information, action and analysis, wherever they were.

The A$60 million paid by Telstra for the new media rights for the 2007-11 seasons is more than double the A$25 million figure negotiated in late 2000 as part of the Foxtel / Nine / Ten / Telstra consortium that wrested AFL television and Internet rights from Channel Seven. When combined with the A$780 million TV rights deal with the Seven and Ten networks, the AFL will reap a total of A$840 million in cash and services in-kind for traditional and new media rights for the next five years, with the radio rights still to be completed.  These TV and Internet rights deals do not include overseas television distribution rights for 2007 and beyond for which no public offering has been announced.  

While there was speculation the AFL was hoping for as much as A$100 million from internet and mobile phone rights, it is understood to be more than satisfied with A$60 million, the result of spirited bidding from an estimated five or six corporations.   [Ed. note:  AFANA supported the bid offers of other contestants in this rights competition.   However, we had no financial involvement in those offers.]

Telstra, which has begun to renegotiate new media rights with the National Rugby League, initially knocked back the AFL's opening offer to take the rights for $20 million a year, giving up its first right of refusal. Discussions continued during the year and it was understood Telstra and the AFL reached a broad agreement to proceed with a final deal about three months ago. Rival bidders were believed to be either unwilling to pay the amounts the AFL was seeking, or eyeing a more "creative" deal involving online services for the AFL and clubs.

Sources: Melbourne Age; The Australian; AAP; Telstra and AFL media release; author's notes

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