Fox Footy Channel To Close

Future of Cable and Satellite Coverage in Australia Unclear (updated)

by Rob de Santos and Johnson Leung, reporting for AFANA

In a press release issued today (23 August 2006), Foxtel announced that at the end of this AFL season, the Fox Footy Channel (FFC) would cease operations.  The closure was blamed on "The positions taken by Seven and Ten and the delays and uncertainty over the future" leaving "FOXTEL with no option but to close its dedicated AFL FOX Footy Channel at the end of this season."  The apparent breakdown in negotiations between Foxtel and the Seven and Ten Networks leaves the future of pay television coverage in Australia in doubt. 

There is no immediate impact to viewers in North America as whatever networks have broadcast and cable rights in Australia next year they will become the suppliers to our coverage.  It does however suggest that the rumors of a possible role for ESPN Australia in the coverage next year might have something behind them.  However nothing said today clarifies that issue whatsoever.

Foxtel also stated in their press release that they had "made 2 offers to Seven and Ten since negotiations commenced in February this year for subscription TV rights, yet there is still no agreement.  ...  If FOXTEL can secure future subscription TV rights to the AFL, the coverage will become a core part of the new FOX Sports 3 channel to be launched on October 1 this year which can be accessed all FOXTEL Digital subscribers."  How substantively different Fox Sports 3 would be from FFC if it covered the AFL next season is vague and unclear. 

Foxtel also blamed the closure on Australia's anti-siphoning legislation which requires a major percentage of live sports events to be on over the air television.    Foxtel said that it was unable to deal directly with the AFL for rights as a consequence of this legal situation.  The Australian government has indicated major changes to those laws are likely before the current term of the Liberal government ends.   However, it appears those will not happen in time to make any difference here. 

Seven and Ten won the rights to broadcast the over the air coverage of the AFL in Australia from 2007-2011 in a deal worth A$780 million earlier this year.   As part of that deal they must either broadcast all eight games live or they may sublicense up to four matches each week to a subscription television channel such as FFC.  Negotiations with Foxtel have been underway for months without any sign of a resolution.   A report in The Australian newspaper indicates that Seven and Ten feel that Foxtel is offering much less than they were willing to pay as part of their failed bid with Nine Network and less than they are paying now for 3 games per week.   Some say the offer has been as low as A$20 million per year for 3 games but Foxtel claims it is closer to the A$36 million they are paying currently.  Seven and Ten are holding out for up to A$60 million for 4 games per week. 

Seven and Ten responded to the announcement by Foxtel by blaming Foxtel for the impasse.   A Seven spokesperson caled Foxtel's FFC a monopoly and a press release by Seven stated that "This has nothing to do with anti-siphoning legislation and everything to do with the fact that Foxtel is making an initial offer aimed at squeezing any form of competition out of the market for sports rights."

The AFL issued a press release and in it praised FFC for their work the past five years.  Chief Excutive Andrew Demetriou was quoted as saying:  "In terms of the implications for the AFL's Broadcasting arrangements for the next five-year agreement beginning in 2007, the AFL has an agreement with the Seven and Ten Networks that all eight matches will be broadcast next year, and for the life of the agreement, on free to air television.  Our agreement provides for up to four matches per week to be licensed to a pay-tv operator, should Seven and Ten reach an arrangement with any pay-tv carrier.  However, if no agreement is reached, then our matches will be broadcast on free to air television," he said.

Foxtel chief executive Kim Williams was quoted as telling The Australian newspaper:  "Foxtel is prepared to pay more for AFL, but only if it receives more live games on better conditions than it currently receives.  Until such time as Seven and Ten recognise that Foxtel is central to making the AFL schedule work, there'll be no resolution. ... We're not going to let these rogues eat our lunch." he said.

Sources in Australia tell AFANA that the next move in this impasse will likely depend on whether there is another serious player in the game such as ESPN Australia and whether this is a negotiating ploy by Foxtel or if they really intend to walk away from the negotiations.  Foxtel has a complicated ownership despite carrying the Fox brand.   Foxtel is 50% owned by Telstra (itself 51% owned by the Australian government).  The remaining half of Foxtel is equally shared by Fox parent company News Corp, Ltd. and Publishing and Broadcasting Ltd  or PBL.  PBL is the parent company of Nine Network.  Nine is a current rights holder to the AFL and lost out in the bidding earlier this year. 

Story Sources:  Australian Associated Press, The Australian, Press releases by Foxtel, Seven Network, and the AFL, along with reporting by Johnson Leung for AFANA from Melbourne, Australia