Sport: 'Dead in the water': Foxtel austerity drive signals end of sports rights boom - PressFrom - Australia
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Sport'Dead in the water': Foxtel austerity drive signals end of sports rights boom

02:50  15 may  2019
02:50  15 may  2019 Source:   theage.com.au

Foxtel signals price hike, cuts to 'non marquee' sports after $417m loss

Foxtel signals price hike, cuts to 'non marquee' sports after $417m loss News Corp has flagged Foxtel price hikes and cuts to spending on 'non-marquee sports' after the pay TV company posted a steep loss in 2018.

Foxtel spends 0 million on sports rights each year and media analysts say moves to pull back spending by the pay TV giant could affect the entire Rugby Australia is expected to be the first sporting body to face the austerity drive as it begins negotiations over a new broadcast rights deal

The austerity delivered since 2010 has meant deficit reductions predominantly achieved via curbs on spending. A reduction in spending from 45.3 per cent to 37.9 per cent of GDP is expected to deliver 80 per cent of the envisaged fall in the deficit.

'Dead in the water': Foxtel austerity drive signals end of sports rights boom© AAP AFL and NRL could also be affected by Foxtel's cost cutting

All of Australia’s sporting codes - including the AFL and NRL - could be impacted as pay TV provider Foxtel reins in spending on "non-marquee" sports, in a sign the era of record rights deals may be ending.

Foxtel spends $800 million on sports rights each year and media analysts say moves to pull back spending by the pay TV giant could affect the entire sporting landscape.

“There is no question now that Foxtel is putting away its cheque book and Foxtel has been the driver of this market,” said media analyst Steve Allen.

Rupert Murdoch's News Corp, which owns 65 per cent of Foxtel,  flagged cuts to "non-marquee sports" in an update to the ASX on Monday after revealing the pay TV company lost $417 million in 2018.

Sports world on high alert as Foxtel fights for its future

Sports world on high alert as Foxtel fights for its future It almost passed by unnoticed that one of the Murdoch family's key assets in this country has been desperately gasping for air. It's no secret Foxtel has been struggling amid the rise of streaming services such as Netflix and Stan (the latter is owned by Nine, which also owns this masthead). But the extent of the challenges it is facing have become much clearer over the past two weeks. "Structurally, News Corp's media assets are in a terrible position," CCZ Statton Equities analyst Roger Colman says. "The best way to describe it is they have got a lot of issues to address.

Austerity is a political-economic term referring to policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. Austerity measures are used by governments that find it difficult to pay their debts.

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Rugby Australia is expected to be the first sporting body to face the austerity drive as it begins negotiations over a new broadcast rights deal, but Football Federation Australia's (FFA) A League is expected to be hardest hit.

“If I was Rugby (Australia) and the FFA I’d be concerned as they would be looking at savings there, but this could profoundly change the whole market,” said Global Media and Sports boss Colin Smith, who has previously worked with the NRL on its broadcast deals.

'Dead in the water': Foxtel austerity drive signals end of sports rights boom© AAP Steve Smith of the Australia XI in action during a One-Day cricket practice match.

The A-League's current deal is worth around $40 million a year with $35 million of this coming from Foxtel, according to industry analysts.

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Mr Allen said the A-League is "dead in the water" without Foxtel's support, but the impact is expected to be felt all the way from V8 Supercars to the top tier sports.

Foxtel's blockbuster deals with NRL and AFL, worth a combined $3.5 billion, do not expire until 2022.

The pay TV subscriber numbers, revenue and earnings are going backwards in its core pay TV business despite a massive spend on sports broadcast rights in recent years.

The focus will now have to be on “what are people really interested in, what are they prepared to pay for,” said Mr Allen.

“Now they have to ruthlessly go through their expense base and look at whether particular sports they’ve bid for have netted anything in terms of subscribers.”

Cricket Australia's $1.2 billion rights deal with Foxtel and Seven West Media last year is now being viewed as the high water mark for sports rights in Australia.

Free to air television broadcasters are not expected to be able to pick up the slack if Foxtel does start cutting back, and sporting codes rely on broadcast deals to provide up to 65 per cent of their revenue. The broadcast deals also drive sponsorship dollars.

Foxtel and News Corp did not respond to requests for comment on Tuesday.

In the market update, News Corp also flagged further price rises for Foxtel.  The media giant was forced to diclose the financial details to shareholders after they were provided to potential lenders as it seeks refinancing for Foxtel debt totalling $US1.68 billion.

It comes after News Corp provided Foxtel with a $300 million lifeline to cover debts maturing in April. Telstra, which owns the reamining 35 per cent of Foxtel, did not contibute any new funding.

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