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Major changes in Sporting Landscape on TV

April, 2018

In a whirlwind of events, two major sporting rights have changed hands. The result of which will dramatically change the sporting landscape on broadcast TV over the course of the next few years.

Tennis Australia

Last week it was confirmed that Nine Entertainment Co (Nine) has secured the Australian Tennis rights from Seven West Media’s (Seven). The 5-year deal commences from 2020 onwards at annual cost of $60M. Given the amount of tennis that is played out across January, Nine are likely to offload a portion of the tennis (such as the Brisbane International or the Sydney International) to another platform.┬áThis could include a telecommunications company, social media platform and/or Foxtel. This will help Nine offset their investment overall. At the time of the deal, this was a major coup for Nine given their already impressive sport offering, particularly across summer.

Cricket Australia

Off the back of the Tennis broadcast rights announcements, along with a stalling conversation between Nine and Cricket Australia, FOXTEL and Seven have swooped in to outbid a joint Nine and Network Ten (Ten) proposal for the rights to all Cricket across summer. A 1-billion-dollar deal has been agreed, with FOXTEL securing both the TV broadcast and digital streaming rights, in a simulcast deal with Seven. This will change the landscape for advertisers, but how it impacts is yet to be seen, but most likely in costs.

FOXTEL were the leaders of the proposal and will bare most of the cost. Seven will broadcast Tests and 46 Big Bash games which will also be simulcast on FOXTEL. The OD ls and T20 internationals, plus the remaining 14 Big Bash games, will be all exclusively on FOXTEL.

The deal has ramifications for all three major FT A networks. The impact was felt by Nine as the stock price according to the ASX had dropped 2.5% within 1 hour of the rights being confirmed, however this was offset with the rise on Nine by 2.8% when the Tennis rights were announced. Ten will be hit the hardest with the loss of the Big Bash across summer leaving a major gap that will impact audiences.

The 2018/2019 Summer of Sport

Seven have a pleasant headache, as they have the rights for both the Cricket and Tennis for the upcoming 2018/2019 summer. It is unknown at this early stage as to how they will prioritise Big Bash/Tests/Tennis, however they will require use of multiple channels to cover everything.

The big question is which sport will Seven broadcast on the main channel for the higher audiences? We predict that tennis may take a back seat, with finals saved for the main channel making way for Big Bash games to be broadcast on the main channel during the Tennis early rounds in each tournament.

Both Nine and Ten now don’t have a strong lead in to start the summer or ratings season in 2019. Not being able to capitalise on the big sporting audiences over the Summer period to promote their upcoming programming could prove problematic.

Impact for Nine is less with tests and ODI internationals spread thin in the last season, they have had to pad out programming in summer other ways to create a launch. We saw no impact this year with the audiences low for ODI games and their start to the year was strong delivering growth on the back of the success of Married at First Sight.

We see the bigger impact on Ten losing the rights to the Big Bash. Over the last few years, they have built this up and driven solid Summer audiences, with the Big Bash providing a great launch pad for their programming. Ten now have a major hole to fill, not just in the short term like Nine, but longer term. Would they consider moving forward the launch of tent pole programming to start earlier or will they introduce Australian audiences to a new program to create some hype.

Final Say Overall

Seven have secured a strong outcome that will deliver audiences over summer which will replace Tennis as a launch pad. Even with a simulcast on FOXTEL and a movement of viewing from FTA to STV for Big Bash we predict the audience for Seven to be as strong if not better than the tennis. All for an investment that is lower than what was required for the new tennis deal.

Whilst Nine will have to scramble for this summer they are positioned for the future. From 2020 securing all rights across every platform with Tennis Australia enables Nine to deliver an audience across all screens. The access to all platforms will allow Nine to bring additional benefits to advertisers which we will predict be around data and addressable TV.

Ten will be the one to watch as they will need to have a summer strategy to fill the loss of Big Bash. They do have cash and access to the biggest Network in the world, so we expect that they will come back with alternative to sport.

FOXTEL have acquired the cricket to lock down subscribers. We predict they will set up their cricket assets to be a similar model to their NRL approach. With lower adbreaks and no ads in live play. This is a proven model which has driven successful viewing growth across NRL and AFL.

Originally posted by Melissa Hey, Chief Investment Officer OMD Australia and Andrew Mann, Trading Manager OMD Sydney.