Media buyers describe AFL rights as a ‘jewel in the crown’ as networks prepare for battle

Carat's Simon Ryan

Carat’s Simon Ryan

Australia’s media buyers are keenly watching the imminent start of the AFL sports rights negotiations in the wake last Saturday’s grand final, which drew more than 4 million viewers nationally.

Today’s Fairfax Media and News Corp newspapers all carry strategic leaks from the AFL announcing the imminent commencement of negotiations for a 10 year multi-billion dollar deal for the major sporting code, which is expected to see all the commercial TV networks and Foxtel enter the fray in the hope of securing part or all of the rights.

CEO of media agency Carat Simon Ryan, who represents major brands such as Woolworths and Virgin Airlines, said the rights were “absolutely crucial” to ratings and also the ability to cross promote other programming, and said he would watch with interest to see what type of deal a network such as Ten, which has been in the ratings doldrums, would try and forge.

“I think the rights are absolutely crucial because it brings not only ratings to the game but it also brings more audience to the network which the network can then publicise its other programs to get ahead of its other competitors,” said Ryan.

“Ten should try and make play,” he said. “The AFL is the jewel in the crown so therefore it would be great to see the network that needs to lift its overall average ratings, such as Ten, get in there in some way, shape or form.”

The current deal, which expires in 2016, sees Seven and Foxtel share the rights but all the free-to-air television networks and along with the pay-TV operator are expected to be invited in the coming weeks to bid for what is expected to be a multi-billion dollar deal.

For media buyers the outcome of the rights negotiations will be crucial with many describing the code as increasingly a national game which is able to command strong audiences, not matched by cricket or even NRL.

“While it has always had a heartland in certain states, increasingly AFL is becoming a national game and I think they have been quite successful in that,” said Toby Hack, managing director of PHD.

“And the thing about TV is that it is still hugely attractive to advertisers and you see that across every genre of programming and no where  is that more true than sport, particularly in this country.”

Ikon’s Scott Barnes noted that the AFL were cleary capitalising on growth in key markets like Sydney. “There is no doubt the AFL will try and capitalise on its growth in key markets off the back of their franchise success. Particularly the Swans, Port Adelaide and Fremantle,” said Barnes, head of sports, partnerships and activations at Ikon Communications.

“With Sydney have increases in membership and viewership the AFL are trying to capitalise on the back of that.”

Sources have told Mumbrella that all the free-to-air networks are likely to bid, including the Nine Network which already holds the rights to the NRL and Cricket.

Any bid by Nine is likely need a partner to share the content and that would likely mean winning Foxtel away from Seven or sharing games with Ten, as the Seven Network did in the deal before last. Foxtel already partners with Nine for the NRL rights.

Seven is generally seen as the front runner with some media buyers sceptical about whether Ten could win the rights on their own or in concert with Foxtel, and are instead focused on which partner the pay-TV provider choose to dance with.

“It would be a hell of punt for the AFL to go with Ten,” said one senior media buyer, who declined to be named. “They have such a long and deep relationship with Seven. It would really surprise me.”

“If you were the AFL you would want Seven as the number one network but while we talk about the free to air its worth remember that Foxtel has just changed its price.

“It is making itself more accessible and you can see more AFL on Foxtel than you can on Channel Seven. It will be interesting to see what that means for the rights.”

Carat’s Simon Ryan said two things were certain: one that Foxtel would be an important player in negotiations and that the pricetag of the package was likely to rise significant from its current $1.25bn price over five years.

“From what I understand, they want (up to) two free-to-air networks to win the rights along with Foxtel, I think that could boost the value by as much $3bn over ten years.

“I think the networks are expecting an uplift from the five year (deal) that the AFL has Seven West Media, Foxtel and Telstra, which could put at risk increases to other sports in the market as well such as rugby union.”

Ryan also said he saw Seven as the frontrunner. “I think Seven do a good job with the negotiations and they have good relationship.

“Seven are obviously considered to be the favourite and I think Tim Worner (CEO of Seven West) will do a fantastic job as he has always done in leading the negotiations.”

Another element to negotiations is likely to be the digital rights, as viewers increasingly migrate to mobile devices.

“I think the AFL should try and monetise that separately if they can,” said Ryan. “You either do an all one up deal, and you do it well, or you cut it out and do a separate deal with Telstra etc a deal with the networks on the digital rights but my suggestion is it should stay one of the same.”

Ikon Communications sports lead Barnes however questioned the ten year length of the proposed deal.

“The media landscape is changing so rapidly the the length of the proposed deal is the most surprising thing for me,” said Barnes. “When we look at the evolution of digital rights the code themselves will become their own media suppliers in years to come.”

“We don’t know where the media landscape will be in five years time. If it was a shorter deal I could absolutely understand it.”

Media buyers also had mixed views about recent fan complaints about the lack of HD in the AFL broadcasts with some urging the Seven and the AFL to lift its game and make it part of any future deal, while others described it as a side issue.

“Increasingly consumers are spending an awful lot of money on bigger, better quality televisions and those screens deserve a better quality product to be shown,” said Hack. “The reality if is the networks broadcast on HD their product is going to look better.”

While Carat’s Ryan said: “Its just a matter of time until it all become HD anyway. These are small things on the side of the negotiation, in my view, Ten is keen but Seven is the favourite and I think Foxtel is a must.”

Nic Christensen 


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