Sport: The future is now as NRL prepares for next TV broadcast rights deal - - PressFrom - Australia

Sport The future is now as NRL prepares for next TV broadcast rights deal

02:05  26 october  2019
02:05  26 october  2019 Source:

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The future is now for the National Rugby League . The governing body is just two years into a five-year, billion broadcast deal , but already preparations are being made for the next one. The NRL is already preparing for its next broadcast deal . Credit:Sitthixay Ditthavong.

The NRL will consider bringing broadcast production of its matches in-house for the next television rights deal to maximise revenue in a move that would have huge ramifications for its traditional media partners. There could be huge changes to the way the NRL is covered and consumed in the future .

a crowd of people watching a football ball: The NRL is already preparing for its next broadcast deal.© Sitthixay Ditthavong The NRL is already preparing for its next broadcast deal.

The future is now for the National Rugby League.

The governing body is just two years into a five-year, $2 billion broadcast deal, but already preparations are being made for the next one. Given how quickly the media landscape is changing, nobody knows what it will look like.

“There isn’t a single model that everyone is pursuing,” says a source who has been involved in previous negotiations for Australian sporting rights deals. “All of the major [global] players are pursuing a different model because the world is so fragmented. Everyone is placing a bet and learning.”

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Existing television rights holders will oppose any deal that cuts them out of the production process amid predictions the NRL could be worse off financially if it There could be big changes to the way we watch rugby league in the future . Credit:Getty. The current rugby league rights holders, Foxtel and

The NRL 's next TV deal , to begin in 2018, will be the last contract under which viewers will be able to see all games on free-to-air and pay TV , before some games are streamed exclusively on the internet, via mega-rich overseas interests, such as Netflix. Whole new ball game: NRL chief executive Dave

It’s a gamble sporting organisations can’t afford to get wrong. In the NRL’s case, it doesn’t own a single asset and broadcast remains its major revenue stream. If the traditional networks can’t afford to pay as much and the ‘FANG’ disruptors - Facebook, Amazon, Netflix and Google - don’t enter into the fray, there will be less money for the game to survive on.

“I think the transition will come slowly and in a very confused and difficult fashion over the next decade, especially in countries like Australia where we haven’t even completed the NBN rollout,” says sports marketing expert Con Stavros, an associate professor at RMIT University.

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The NRL season runs over the course of 25 home-and-away rounds and four weeks of finals, starting in the first week of March and concluding with the grand final on the last Sunday in September. The NRL signed a .8 billion TV deal that came into effect in 2016, but has incurred some changes since then.

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“The TV networks are being squeezed and they can’t overpay for sport and try to make it up elsewhere," he says. “The big bidding wars won’t be there in the future. For most sports, they don’t know what they are going to look like and many of them are probably better off locking in something now if they can.”

Rugby league has long gone with a two-partner model of a free-to-air and subscription provider. The existing deal with Foxtel and Nine Entertainment Co – the publisher of the Herald – expires at the end of 2022, but already the media landscape has shifted dramatically since the ink dried on the last deal. Nine had been the home of cricket for three decades but opted out in favour of tennis when it no longer made financial sense. Nothing is forever.

Fox has its own challenges. In a statement to the ASX in May, News Corp flagged cuts to spending on "non-marquee sporting content" and increased subscription rates after a financial loss of $417 million in 2018. In a bid to offset consumer churn, it introduced sports streaming service KAYO, effectively cannibalising its own market in the process.

NRL considers in-house production for next TV rights deal

  NRL considers in-house production for next TV rights deal As the media landscape shifts, league officials are considering radical changes to maximise the broadcast value of the game.The existing deal with Foxtel and the Nine network – the publishers of the Herald – doesn’t expire until the end of the 2022 season. However, the governing body is already planning for the next rights negotiations to ensure all options are considered in a rapidly changing media landscape.

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“That damages the business model of Foxtel,” says an industry expert currently involved in a sporting rights negotiation. “It’s driving their average revenue per user down. If you were at $78 [with Foxtel per month] and now people are taking up the $25 offer, simple economics dictate revenues are down.”

It raises questions over whether Fox can afford to play a similar role next time around.

The NRL isn’t waiting to find out, although it’s unlikely meaningful negotiations will commence for at least another 12 months. Rugby League Central is considering all of its options, including bringing broadcast production of its matches in-house. The model has been used overseas and locally, most notably with V8 Supercars and in tennis.

However, industry experts such as Global Media and Sports boss Colin Smith – who has advised the NRL, AFL and ARU during previous rights negotiations – believes the move could increase rather than reduce costs. The only local production companies currently equipped for the task are NEP or Gearhouse. However, a well-placed source with knowledge of the upcoming rights negotiations predicts Fox would transform itself into a production house in time to produce the content for the next league, cricket and AFL rights deals.

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“Whoever the free-to-air rights holder is will probably end up with less sport but put their own commentators in to voice over the pictures delivered to them by Fox Sports,” the source says.

The next TV deal will be the first big-ticket item for incoming Australian Rugby League Commission chairman Peter V’Landys. The Racing NSW boss will next week officially succeed Peter Beattie, whose greatest legacy is perhaps the introduction of the “no fault” stand-down rule to address off-field player misbehaviour. One of the first stars affected, Dragons forward Jack de Belin, unsuccessfully challenged its validity in the Federal Court, where the NRL claimed scandals had already cost the game $10 million in lost sponsorship and that the figure would balloon to “hundreds of millions” of broadcast revenue if left unchecked.

“We are looking to the future, which is why we have started,” Beattie says of preparations for the next rights deal. “It’s very early and it’s rapidly changing. It’s something that doesn’t stand still and for us it’s about maintaining value for the game. That’s what the no-fault rule was about, all of the digital stuff we’re doing, the women’s game, the footprint work. All of that adds value to the game.

“The good thing for us is that while the media landscape is changing, our value as a sport has been maintained," he says. “Even in free to air - and people are looking at other devices and other stuff - our share of that has increased.

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There are fears the value of the next broadcast deals for sports such as rugby league and Those hoping to follow the NRL without a pay- tv subscription could soon be disappointed. While that sum represents a 70 per cent increase on the previous rights deal , there could be a downside in the future .

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“We’ve made no decision to go early or late, we’re just getting ready and looking at all the options.”

Nothing is off the table. In-house production, having multiple free-to-air or disruptor partners, creating new content opportunities, ending simulcast arrangements, selling off properties such as State of Origin separately, playing matches over quarters to increase advertising slots - they are just some of the ideas that are being workshopped behind the scenes. The CBS-owned Ten network has already publicly confirmed it will likely engage in the bidding process, while Seven will need to weigh up whether it can commit to AFL and NRL.

Meanwhile, viewing habits continue to change. Smith believes traditional television viewership is down 20 per cent in just five years as content is increasingly consumed on other electronic devices. However, he describes top-end league content as a “must have” for free-to-air broadcasters.

“It provides Australia’s blockbuster [ratings result] with State of Origin averaging over 9 million viewers alone, all exclusive on channel Nine,” Smith says. “Fans watching games on TV is more than 10 times greater than attending a game - for the NRL that is even higher, [about] 15-20 times as the NRL is perfect for TV.”

There was once a time when moguls bought media rights for bragging rights. However, a source close to current negotiations says companies are no longer prepared to pay "overs" in order to trump their contemporaries.

“The days of Packer versus Murdoch versus Stokes are over,” the source says. “These companies are now answerable to boards and shareholders and they won’t cop a $50 million loss to win a pissing contest.”

NRL executives and prospective media partners aren’t the only ones watching nervously as the landscape shifts. Any drop in broadcasting revenue will result in less money to clubs (they are currently funded to the tune of 130 per cent of their salary cap limit), meaning the players could also be out of pocket once the current collective bargaining agreement expires.

“If the revenues do come off in the future, that is something we will have to take into consideration,” says Rugby League Players’ Association chief executive Ian Prendergast. “However, I’m still optimistic there will be ways to slice and dice the rights in the future to at least maintain the current revenue that flows from broadcast rights. Hopefully we can continue to build on it in the future.”

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