Foxtel’s cunning plan to break Nine Entertainment on NRL footy rights

The biggest game in Australian sport is currently not being played on any venue. NRL broadcast rights battle between Nine Entertainment and Foxtel. Michael Pascoe He says that no matter the outcome, Nine could lose.

This is a diabolical situation for any CEO: lose the NRL broadcasting rights for the next seven years and collapse the company, pay too much for the broadcasting rights and collapse the company.

That’s the risk facing Nine Entertainment’s Max Stanton. The possibility of a third outcome (paying just enough, not too much) also became increasingly likely. AFR reporting Foxtel is bidding to buy all streaming and streaming and spin out Nine entirely.

This is a battle between financially weakened local brass and a Ukrainian/Russian/Anglo-American billionaire.

The rights are currently shared by Foxtel and Nine until the end of next season. Foxtel’s reported pitch will replace Nine’s free-to-air component and bring both Seven and Ten into play; Seven will broadcast matches on Sunday and Monday, while Ten will broadcast on Thursday and Friday nights.

What Nine wants

Nine wants full rights to power its Stan streaming platform, which would be a major blow to Foxtel.

One way or another, the AFR’s Zoe Samios reckons the bidding war will give Rugby League (and Racing NSW) chief Peter V’landys a $4bn rights target, a billion more than Nine is thought to have offered and double the current deal.

Talk about inflation.

It’s always tempting to see conspiracy in local media games, but this fight is international. Thirty years have passed since the Packer and Murdoch “Super League” war. Packer is no longer at Nine and Murdoch has just a 6 per cent stake and one board seat in London-based DAZN, which owns Foxtel; That’s less than 10 percent of the Saudi government’s ownership, and both percentages are insignificant given that billionaire Len Blavatnik holds the majority in Access Industries.

Blavatnik was born in Ukraine, grew up in Russia, and is a citizen of both the United States and the United Kingdom. He made his fortune by purchasing newly privatized Russian goods in the 1990s. Forbes estimates he is worth more than $50 billion.

Last quarter?

Nine Entertainment has a market capitalization of $1.44 billion and is trying to hold on to 91 cents per share following news of Foxtel’s bid. The price/earnings ratio is trading at 1.57, which means the market is not very optimistic about the future. This compares with the average PE ratio of around 20 for the ASX 200.

Deep pockets versus nearly empty pockets, as Granny just paid $850 million to buy billboards from an outside advertising company.

Live sport remains a cornerstone of free TV, thanks to government anti-trafficking rules. As Seven’s slide into oblivion shows, buying it at the wrong price is toxic.

Because the company is dominated by non-journalists, it will be expensive newsrooms that will again be at the forefront of cost-cutting.

If Granny’s board and management get the equation wrong, the result could be fatal.

There’s no printer ink on Nine’s top and there was little to show for the synergies expected to come from Nine’s acquisition of Fairfax. The split would leave a cheap newspaper stable and a cheaper publishing arm up for grabs.

Never mind breaking up.

The importance of the rugby league contract to the company’s existence may explain the decline of Peter V’landy’s interests beyond television.

gambling ads furphy

Nine is trying to ensure the NRL is to SMH what the AFL is to The Age, elevating a wealth of NRL news on the homepage each day above the politics, world, business and opinion sections.

If the Federal Government is any indication, another rabbit hole potentially being driven by a $4 billion broadcast deal is burying the “sport needs it” excuse for gambling advertising.

None of the major domestic football codes face meaningful international competition for talent.

The average AFL player is paid over half a million a year and the average NRL player is paid over $400,000 because there is money to pay them. If it weren’t so, the games would still go on, even if the athletes (and CEOs) were paid slightly less.

And please don’t try the old lie of “it’s for the kids.” Any government serious about promoting children’s sport will pick up the insurance bill and stop massive subsidization of very rich commercial activities such as the AFL and NRL.