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Johnson Leung reporting for AFANA from Melbourne with additional contributions from our US based staff

Pay TV provider Foxtel and its half-owner Telstra have emerged as the biggest winners of the new AFL domestic broadcast deal, as Channel Seven retains the free-to-air rights to the competition. For the first time since 1997, the primary broadcaster will not change. In the biggest media deal in Australian sporting history, Foxtel and country Pay-TV provider Austar have won the right to televise every game (except the Grand Final) live , while Seven has the right to broadcast a minimum of four matches each round during the regular season and the Grand Final live.

We have a full report and analysis of the impact on US and Canadian fans.   The main points of the 2012-2016 broadcast deal include:

  • Foxtel will televise every game of the regular season live. Foxtel will revive its 24-hour AFL channel, to be renamed Fox Sports AFL, to provide live coverage, with some matches to be broadcast live on Fox Sports 1 on Saturdays and Sundays if two matches overlap. The channel is not expected to be available in the USA or Canada. 

  • Seven will televise a minimum of four matches each week during the regular season, on Friday night, Saturday afternoon, Saturday night and Sunday afternoon.

  • The Friday night game will be broadcast live in Victoria for the first time, and on reduced delay into South Australia and Western Australia (currently the delay is between 1 hour and 3 hours). The kickoff time has been pushed back by 10 minutes to 7.50pm for matches in Melbourne, but remains at 8.40pm AEST for matches held in Adelaide and Perth.

  • The Saturday afternoon match will be broadcast live on Foxtel, starting at the earlier time of 1.45pm AEST, and on a 90-minute delay on Seven. The Sunday match to be broadcast on Seven will start at 3.15pm AEST, leading in to the 6pm news.

  • All matches involving the Crows, Power, Eagles, Dockers, Lions, Suns, Swans and new team GWS Giants will be broadcast into their home state on Foxtel and Seven.

  • Foxtel and Seven will televise every game live during the first three weeks of the Finals series, with the Grand Final to be shown live on Seven only.

  • Foxtel will televise every game of the pre-season competition live, with the pre-season Grand Final to be simulcast with Seven.

  • For the first time, Telstra will stream every match including the Grand Final live over its Next G cellular network to smartphones and tablet devices and at least one live game per week to T-Box customers using IPTV (internet protocol television) technology. The telco firm has also secured a deal with Foxtel to stream every match live if T-Box customers subscribe to Foxtel in a service due to start in May.  It is not known how this will alter international coverage though AFANA does not expect that any streaming to North American fans would be free so if it is available to non-Australian smartphones and tablets, it is likely there will be a subscription fee. 

  • Telstra and Foxtel will simulcast Seven's matches and carry all of Seven's pictures, commentary and commercials. Foxtel will also carry Seven's commercials during quarter breaks, as well as before and after each match.  As with the present coverage, these commercials will not be shown to foreign audiences due to restrictions in talent contracts. 

  • Foxtel and Seven will televise the Brownlow Medal live. Foxtel's coverage of the Brownlow Medal ceremony will also contain Seven's commercials.

  • Telstra will continue to manage the AFL official website and club websites.

The final deal is worth A$1.253 billion (US$1.37 billion), of which A$1.18 billion is in cash and the rest in contributed benefits ("contra") such as advertising and promotion. The deal is A$369 million higher than the A$780 million Seven and Ten paid for the 2007-2011 rights contract, of which A$749 million was in cash. The total value comprises A$534.5 million in cash and A$85 million contra from Foxtel, A$425 million cash and A$50 million contra from Seven, and $155 million from Telstra. The cash contributions from Foxtel and Telstra are up from the previous deal (A$315 million and A$60 million respectively) but Seven's contribution is A$40 million less.

The fact that Seven paid less cash for the free-to-air rights, and that a minimum four matches per week will be broadcast on Seven's digital channel 7mate into New South Wales and Queensland in the new agreement, paves the way for Seven to bid for the National Rugby League broadcast rights. The current rights deal with Channel Nine and Foxtel expire at the end of 2011.

The AFL has abandoned experiments with Thursday and Monday night football after broadcasters argued it made the weekend too long, despite Foxtel's ratings success with the NRL on Monday nights. The AFL also dismissed Seven's ambition to look at a twilight or night Grand Final.

AFL Commission Chairman Mike Fitzpatrick said the deal was driven not by financial motives, but by what the fans want: more live football on TV. "This is a landmark agreement that will take the game to more people than ever before, in ways never seen before," he said. "It is a great deal for football and a great deal for football supporters who remain the heart and soul of our game."

Seven West Media Chief Executive David Leckie was delighted with the deal. Seven West Media was formed in early April from the merger of Seven Media Group, which owns Channel Seven, and the West Australian Newspapers Holdings, publisher of The West Australian in Perth. "It's in our DNA, AFL," Leckie said. ''It's been a lot of hard-at-the-ball (discussions) for the past two years and certainly for the last year it's been a day-by-day all-in brawl, it's been very tough, but we're very happy and it's a great deal … While we've been very aggressive, the AFL deal is going to cement Channel Seven as No. 1 (network) for many years in a row, many, many years in a row, and that's why we aggressively chased it.'' Under the current deal, Seven and Ten each televise two games each week. Seven and Ten again partnered to bid for the 2012-2016 rights last year before Ten withdrew in late March. Leckie maintained Seven still had a good working relationship with Ten, and said Seven could on-sell games to Ten or even Channel Nine if the price was right.

Telstra Chief Executive David Thodey said delivering more live matches and content through cell phones was ''a watershed moment'' for the game. He said: ''It's 89 years since the game was first broadcast on radio, and Telstra is delighted to be bringing live AFL to the digital world ... This agreement represents the coming of age for mobile technology and IPTV. No longer do Australians need to be tied to the lounge-room to catch Australia's favourite sporting code live."

Foxtel is hoping the comprehensive AFL coverage will provide a much-needed boost to subscription rates in Melbourne, Adelaide and Perth. Its market penetration in Sydney is about 39 per cent, around 31 per cent in Melbourne, and even lower in Adelaide and Perth. When Foxtel Chief Executive Kim Williams was asked if his company paid too much for its part of the deal, he said: "If people think we go into something like this and make the investment we have made on the basis of whim, they don't understand our company … Our company is a very rigorously run enterprise that pays extremely close attention to all the metrics that are relevant to our performance."

AFL Chief Executive Andrew Demetriou said the deal was an important result for the fans because it would allow them to watch matches via different methods. He said that players, clubs and fans would receive some rewards from the broadcast deal, but warned the 18 clubs that the contract should not be seen as the windfall that would guarantee their prosperity. While Demetriou assured that the 18-team competition will be maintained until 2016, he conceded the league needed to work harder to reduce the gap in revenue streams that allow richer clubs to spend more on football departments. He also added that the money to be distributed to poorer clubs from the new deal should not only be used to wipe out their massive debts.  Demetriou alluded to increased spending in other areas including international development but no specifics were given and it wasn't clear if this was football development only or included better international marketing.  Historically, the AFL effort in growing the game internationally has not included significant spending in growing the fan base except for television thus leaving the task to AFANA in North America. 

Negotiations for the 2012-2016 deal took more than 18 months, with an AFL subcommittee comprising Fitzpatrick, Demetriou, Chief Operating Officer Gillon McLachlan and Commissioner Chris Lynch involved in the talks. Negotiations were stalled late last year due to uncertainties over changes to the Federal Government's "anti-siphoning" scheme, which has granted Foxtel the power to bid independently for five regular season games. There were still last-minute talks in the past two weeks, right up to the day of the announcement (April 28), on the finer details of the deal, such as the broadcast arrangements of the Brownlow Medal and game coverage into NSW and Queensland.  Anti-siphoning laws restrict the availability of live sporting events to over the air  broadcasters such as Seven and Ten.  Similar laws exist in other countries but not in the USA and Canada. 

Nine, which won the 2002-2006 rights with Ten and Foxtel back in December 2000 and was always determined to reclaim the rights after losing the 2007-2011 rights to Seven and Ten, first committed to televise four matches per week during the regular season. But it was Nine Network chief Jeff Browne, a former AFL executive, who aggressively pushed the idea of giving Foxtel the right to broadcast all games live. The proposal was ratified by the boards of Foxtel and its 25 per cent shareholder Consolidated Media Holdings in October. Foxtel then told the AFL it was prepared to pay A$500 million for the rights, but only if its product included all nine regular season games live.

Seven took some time to accept Foxtel's bid, as the network feared that a simulcast of the Friday night match would dilute Seven's audience to the degree that it could lose the week's ratings war with Nine because of it. After Seven Executive Chairman Kerry Stokes - who holds an indirect interest in Foxtel through his shares in Consolidated Media Holdings - accepted that Foxtel's Williams would not give up the live rights, things began to take shape.

Seven and Ten made a presentation to the AFL on March 24, just hours before the season opener between Carlton and Richmond was held at the MCG. Their bid was believed to consist of A$400 million in cash and A$50 million in contra. However Ten withdrew from the bid a few days later when Acting Chief Executive Lachlan Murdoch (the son of Rupert Murdoch, Chairman of News Corporation, News Corp owning 25 per cent of Foxtel), who bought a large share in Ten in October last year, argued the network would lose too much money as part of the joint bid. Citigroup analyst Justin Diddams estimates both networks lose about A$18 million a year on the deal compared with the amount of advertising the AFL generates.

Both Seven and Ten denied the lawsuits related to Seven Sales Director James Warburton's appointment as Ten's new Chief Executive led to Ten pulling out of negotiations. Warburton was due to begin his new role in July, after his predecessor Grant Brackley resigned on March 2. A few days later Seven launched a lawsuit in the New South Wales Supreme Court against Ten and Warburton over an apparent breach of his contractual obligations. Seven's lawsuit against Ten was dismissed on April 1, however the network's lawsuit against Warburton is still proceeding and a judgment will be handed down on May 12.

Nine lodged a last-ditch bid just hours before AFL Commission met in Melbourne on April 18 to discuss the deal, but pulled out five days later when Seven raised its cash offer from A$400 million to A$425 million.

The AFL Players Association is set to demand a bigger share of revenue from the 2012-1016 deal as part of a new Collective Bargaining Agreement with the League, which could include a pension scheme and better welfare benefits for players. Collingwood premiership star Dale Thomas said the players would not be ''bullied around'' by the AFL and were united in their claim for a substantial pay rise including a demand of a fixed guarantee of 27% of revenue. However, Demetriou stated that AFLPA might be doing its members a disservice by locking themselves into a fixed percentage. Later AFLPA leadership sounded a more conciliatory tone.  Negotiations are due to begin later this year. 

North American Impact and Analysis

Television rights in North America are also due to expire at the end of this season. While neither ESPN nor MHz Networks have publicly indicated that they intend to continue, AFANA expects that they will. The new Australian rights deal will not result in any immediate changes to the situation in North America as the deals are independent.  Any changes would happen with the start of the 2012 season.  The most immediate issues likely to occur are the availability of HD or high definition, television feeds.  At present, Seven does not do AFL matches in true HD so any matches aired here in true HD (not simulated or upconverted) originate with Ten and sometimes Foxtel.  If Seven does not begin doing AFL matches in HD next season (and they have not yet made a public commitment on the issue) then US and Canadian viewers will lose all HD coverage unless the match is produced by Foxtel in HD.  This should become clearer over time.

The advent of the return of the Foxtel 24 hour AFL channel is not expected to have any impact on US viewers aside from the continued availability of the "AFL Winners" show now aired by MHz Networks in lieu of the no longer produced AFL Highlights show. It is unlikely the AFL channel will be available to US viewers any time in the near future. 

The retention by Telstra of the AFL web site and worldwide internet rights is going to be greatly disappointing to most North American fans.  The long-running complaints about the AFL web site on our comments areas, fora, and in e-mails as well as the poor quality and unreliability do not look to change.  This season has seen improvement due to non-Windows computers again being able to use the site and  AFANA analysis suggests that it is quite likely Telstra paid much more than the rights are likely to generate in revenue over the next five years just as they did in the past two contracts.  By using the AFL rights as a loss leader to generate Australian revenue and paying a massive premium for them, Telstra has locked out other companies which would better serve internet dependent fans such as those in North America. 

AFANA will continue to work with the AFL and Telstra to resolve issues but there is no reason for optimism in the near term.  The good news, if any, is that ESPN3 and have been doing an excellent job for the three matches per round available through those sources.  That can be expected to continue. 

This article will be revised if additional information important to North American fans comes to light. 

Sources: Herald Sun, The Age, The Australian, The Australian Financial Review, author's notes, AFANA internal analysis

Article last changed on Thursday, May 05, 2011 - 8:07 AM EDT

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