Could Cricket Australia miss out on TV deal?
Cricket Australia may be a year too late to the table in negotiating a new rights package with television stations.
With the big free-to-air networks cutting costs, it poses the question: is the market is strong enough to secure a significant increase on rights for cricket?
The problems for V8 Supercars in securing a new deal show that TV Networks aren’t flush with cash.
News has broken that Channel Nine is drastically cutting costs to its operating budget this year in order to make the new owners of the company – who take over soon after the debt-to-equity swap that saved the station – happy.
The Australian has reported that chief executive David Gyngell heralded “significant financial challenges” as the reason cuts will be made to all areas of operation. Currently, Nine’s annual costs are about $1 billion and the aim is to trim this back by 10 percent.
This comes on the back of other TV networks and media across the board cutting staff from books.
Network Ten was recently able to acquire the rights for Wallabies matches that were previously on Channel Nine.
These should bring some value to the station during the British and Irish Lions tour of Australia this year, but obviously play a role in how much cash is available for other rights acquisitions.
Channel Seven is undergoing significant change as the company looks to transition leadership to Kerry Stokes eldest son, Ryan.
It wouldn’t be a stretch to imagine a period of consolidation rather than aggressive spending is in store for the current leader of the FTA pack.
It is mooted through various outlets that Channel Seven may cut Today Tonight from its programming (it has been running “special one-hour” editions of the news for a while already) and has already made the decision to drop The Price is Right.
All this spells trouble for Cricket Australia and their quest to obtain a substantially higher dollar value for the next round of broadcast rights.
Channel Nine and Fox Sports combined to keep their existing NRL broadcast rights in a deal of $1.025 billion over five years completed last August.
This was the substantial increase that the rugby league was hoping for and, crucially, it was over the $1 billion mark (including some advertising) they were hoping to hit.
Similarly, the AFL secured a $1.25 billion, five-year deal that began in 2012. The timing of their deal was what placed significant pressure on rugby league’s upcoming negotiations. The AFL negotiated their deal with Channel Seven, Foxtel, Telstra and Austar.
It might be that the AFL and NRL rights will be the high-water mark for increased value if the television industry doesn’t rebound soon.
Cricket Australia’s ace in the hole is the shiny new Big Bash League that just closed the second season with a victory to the Brisbane Heat.
This entirely new, family targeted, night-after-night cricket programming is appealing to free-to-air networks.
So far Fox Sports are the current hosts of this competition.
The Big Bash League has been struggling to break even over the first couple of iterations and Cricket Australia is banking on this new deal to bolster the balance sheet. However, aim of Cricket Australia is to secure an up-tick apart from the value of the BBL.
It was widely reported in December 2012, that Network Ten was very interested in cricket and preparing a bit for the upcoming rights.
This isn’t out of the blue – Network Ten was the initial rights-holder for the Indian Premier League T20 tournament in Australia and the male oriented ONE HD that could be the host of more premier sport.
It wouldn’t be a surprise to see Ten make a strong bid for the Big Bash League.
It remains to be seen whether there is a strong enough market for Cricket Australia to grow the kitty.
An increase should be expected as stations struggle to find hit scripted shows and rely more and more on event programming.
But the question is whether the value of cricket jumps because of the Big Bash League or because the overall value has spiked.