What will be the legacy of Kerry Packers last stand?

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By Redb, 21 Jul 2009 Redb is a Roar Guru

Tagged:: AFL, Kerry Packer, television ratings

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TV rights for sport have become the ‘uber’ source of revenue for sporting codes in Australia. In the past, gate receipts, sponsorship, club membership and merchandise filled club coffers along with social club and pokie machine revenue.

As each sport’s governing bodies endeavour to grow their respective games the surplus of funds generated by TV rights has allowed unprecedented development opportunities to grow football codes especially beyond their traditional footprints.

Kerry Packer changed the sporting landscape in Australia through television. Most notably with cricket with his “World Series Cricket” nationally and the growth of rugby league in his home state of NSW and the sport’s sister state Queensland. According to some he also dabbled in Australian soccer a couple of decades ago.

Packer’s forays into Australian Rules football had been few and far between. At the end of the day he was a Sydneysider who knew little of the game they played south of the Murray River or to be geographically accurate, south of Gundagai in NSW.

Channel 9 in Melbourne through the massively successful Thursday night Footy Show which ran for 8 years without any AFL footage changed Packer’s mind about his ‘interest’ in the sport.

For the first time in some 40 years, channel 7 lost the AFL TV rights to channel 9.

In 2001, after winning the AFL rights, channel 9 enjoyed ratings growth and dominance in some states due to its AFL coverage. All of a sudden Packer saw the potential for the game down south and was eager to join the fray when the rights came up in 2007-2011.

It is history now that channel 7 and channel 10 paid a record $780M for the AFL TV rights for 2007-2011.

What is forgotten is that Nine Network initially did win the rights with a tabled $780M bid. However, channel 7 through a “first and last rights” clause took the opportunity to match the offer and secure the rights.

The $780M offer surprised many observers across the sporting landscape in Australia. It was easily the biggest deal for TV rights.

It led to speculation from other sports notably in rugby league circles that channel 7 paid over the odds because Packer apparently just ‘set up’ his old sparring partner Kerry Stokes at channel 7 (Seven network).

It would have been a pretty big gamble if Stokes wasn’t interested in playing, remember Packer had already technically secured the rights at $780M. Stokes had 14 days to enact his last rights clause.

We will never really know. Was is it the act of a ‘sting’ by Packer or really just a retort after his ego was damaged?

If the bid was just all smoke and mirrors you would imagine that after Kerry Packer’s passing away, the interest in AFL at the Nine Network would similarly drift.

Yet it is a fact that this year channel 9 has more AFL shows than channel 7 at the moment, aside from game telecasts. I count four shows with the Thursday and Sunday Footy Shows, Footy Classified and TAC Future Stars (under 18s). Channel 7 has 1, Gameday.

Over the past 12 months there has been much speculation in particular about the viability of a second NSW AFL team in Western Sydney.

Two new teams are being created to grow the game of AFL in NSW and QLD as well forming an enhanced TV offer to perhaps increase the TV rights to $1 Billion.

The two objectives go hand in hand. TV rights dollars are being used to fund more development and consequently potentially more TV revenue.

Despite wide spread acknowledgement that the Swans TV ratings in Sydney have fallen (in line with its success), channel 9 continues to give oxygen to the AFL’s interest in Western Sydney.

First, 60 Minutes aired a story about AFL juniors in Western Sydney – the rugby league heartland. The story was viewed as a fluff piece as it talked about AFL winning over juniors,etc. This was followed just recently by a similar story on channel 9 Today Weekend edition.

Channel 9 network boss Jeff Browne in Melbourne told The Age newspaper recently: “Of course we’re interested. Channel Nine would always be interested in talking to the AFL about their product. We enjoyed having football in the past and we did a very good job with it.”

It appears Packer’s interest and legacy still lives on.

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The Crowd Says (43) | Page 1 of Comments

onside said | July 21st 2009 @ 10:22am | Report comment

One legacy is how pay tv functions in Australia.Pay TV is riddled with advertisements.
This does not prevalent overseas. Test cricket on FOX has become unwatchable there
are so many ads. Most high profile sports shows are the same.This despite the viewer
pays for the show. Such was the political clout of the Packer empire,in order to minimise
competition, not only was the introduction of pay TV held back for many years , but also
when it could no longer be reasonably denied,a deal was struck that gradually allowed
the introduction of advertising .Everytime you see an advertisement on pay TV, thank
both Mr Packer and the politicians in Canberra who did his bidding.

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Justin said | July 21st 2009 @ 10:28am | Report comment

Onside – I hear you re advertising. I wonder though if this is down to the audience numbers (size of the market here). In Europe you have millions and millions of people in the market. So in effect does Fox need the ad revenue to keep subs down? Just a thought and I could be way off the mark….

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Pippinu said | July 21st 2009 @ 10:33am | Report comment

redb
interesting article – but the question remains – will $1 billion be broached?

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Redb said | July 21st 2009 @ 11:10am | Report comment

Pip,

I think the AFL will get an increase in relative terms to the current landscape. $1 Billion still possible but it would involve more than just FTA and Pay TV with digital channels, mobile phone and internet deals much bigger than before. It is a very different pie.

The GFC has changed the financial landscape for the next decade, no more easy money, world economies rumbling in reverse and neutral, but also both the Seven and Nine Networks have international private investment companies involved (around 50% ownership).

The interesting thing for me is that Stokes is now actively buying shares in Consolidated Media (part owner of Foxtel), he has apparently been blocked from gaining a seat on the board (20% ?), but he is seen as cashed up as a result of the private equity money and ready to take advantage of Pay TV’s growing audience.

Whilst many predict the erosion of Free to Air TV in coming years and there is no doubt they’re losing audience share (approx 1% per year) and advertising revenue. Sport however has and will IMO reamin the jewel in FTA’s crown for the foreseeable future. Particularly live sport.

Redb

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Pippinu said | July 21st 2009 @ 11:17am | Report comment

redb
interestingly, many are already talking of a bottoming out of the GFC, which might mean that when it’s time for the parties to start talking about actual numbers, things may have moved on a bit.

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onside said | July 21st 2009 @ 11:21am | Report comment

Justin,I dont know.I learned this from reading The Rise And Rise of Kerry Packer by Paul Barry
I feel as if I have been conned. Early in the piece there were no ads,then a trickle,now a flood.
In ignorance I thought Pay TV meant no advertisements.Silly me.But I still go to movies that cost
a fortune these days and still have to sit through a bunch of ads.I’ve never figured that one out .

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AndyRoo said | July 21st 2009 @ 11:25am | Report comment

It’s the pay TV part of the equation that will be most interesting I think. If fox decide to go after the southern states they may put up a lot more money in order to secure better games.

That is the only way I see west sydney adding anything to the bottom line of the deal, they assure 9 games a round so an extra game to sell to Pay TV.

If western Sydney TV ratings are the same as the swans then there not worth any money in their own right. Their below the threshhold of what is worth paying money for. Better of with a clip show or a sitcom repeat.

Thats not a stab at the idea of a western sydney team. It’s an investment in the future but I don’t see them beeing a factor in the next 2 or 3 TV deals.

I think the swans may have improve the TV rights based on potential and the fact they increase northern intrest in the finals (even if their not present, their a year round marketing campaign for AFL)

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Redb said | July 21st 2009 @ 11:26am | Report comment

Pip,

That’s true we are seeing a little more bouyancy in the good ship OZ, but the global financial Systems is as still as frigid as a ???….. no i wont say that.

There is not the money around now generally. Many 2nd and 3rd tier financial players are no longer present in Australia, many 1st tier banks are no longer players in the US or Europe at all!. It is a deeper malaise than many realise.

Money 101 dictates that it moves around in all sectors of the economy feeding companies who advertise,etc.

We won’t see the magnitude of the boom from 2003-2007 for some time again.

This may or may not effect the AFL’s TV rights dollars but generally money is not flowing like Niagara Falls anymore, it’s more like the scene at the mouth of the once mighty Murray River.

Redb

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Redb said | July 21st 2009 @ 11:29am | Report comment

onside,

Funny you mention Ad’s at the moment there are less Ad’s on Pay TV for AFL games than FTA – Ch 7 are killing the post enjoyment of a goal.

Redb

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Pippinu said | July 21st 2009 @ 11:34am | Report comment

Onside
I actually haven’t noticed an increasing number of ads on Fox, but like redb says, in aussie rules the FTA’s play ads after every goal (and they have to to get their money back), but Fox doesn’t – so where are you seeing the extra ads?

Certainly, there are stacks of promos for Fox itself – but are you talking about other types of ads?

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