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There is a high stakes game being played between rugby league and Foxtel, based largely on how similar pay television is to smoking cigarettes.
Yesterday the NRL released a bullish state of game where the rude health of the sport was proudly proclaimed, including the news that they are responsible for almost all the top-rating programs on pay TV.
That fact makes the disparity between what is being paid to the NRL and the AFL rather baffling, even more so as noises are being made by Foxtel that they have no intention to pay any more for league in the new deal. It suggests that the network is being run by fools.
Which is of course a long way from the truth. Rupert Murdoch did not become rich and powerful by making silly decisions and employing dumb people. The man has the midas touch, especially in terms of sport, and there is some compelling logic behind the decisions being made.
The company is very aware that there are only two ways they can make money in the subscription TV business. There are the subscription fees coming in from the viewers, and the money paid by companies to advertise to them, with the relative value of the two slowly shifting towards the latter.
So it follows that when they try and make more money, they can either find more people to sign up, or charge more to advertise.
Foxtel have looked at their wonderful league ratings and asked two pretty good questions. Firstly, why are the ratings for league so much higher than AFL when in every other measurement AFL is stronger or at least a lot closer? And secondly, are there any league fans out there who don’t have pay TV, and might sign up?
The network is gambling on the answer to both. The blockbuster ratings for the NRL don’t suggest that they should be paying more for league, it suggests to them that they have done a good job with league, and a rubbish job with AFL.
Why else would the ratings for the southern code be so much worse when the network TV ratings are so similar and the crowds are so much stronger?
This explains their enthusiasm to shell out big dollars to the AFL in order to show every game live. They are expecting the suburban homes across Melbourne, Adelaide and Perth to start signing up like the western suburbs of Sydney have, and for the ratings to explode with lots of opportunities to charge big money for plum advertising spots.
In terms of the NRL, they are very happy with the ratings, and even happier to be charging for them when finding advertisers. But they are also well aware that everyone who is going to subscribe to watch league has already done it. The remaining fans are quite happy to watch it free to air and get the occasional game at the pub.
The field of potential new subscribers is dwarfed by the opportunities down south.
They are also not scared by the noises being made from NRL headquarters that the game could be taken from them if they don’t up the ante on the new deal. The most likely outcome is that they will shell out a little more to keep the league, but not the enormous sums being bandied around.
But what if it did happen? What if the league wasn’t on Foxtel anymore? Surely the network would be worried about killing the goose that lays the golden egg of top rating broadcasts and thousands of subscriptions in Sydney and Brisbane.
Well when you talk to someone who has Foxtel, you are struck with how much it has become part of their life. Whether it be the kids watching the cartoon channels, the docos, movies or just the convenience of recording and replaying live TV, that cable into the TV is very hard to give up.
They know this very well, and when you try and cancel, a better deal is made which keeps the cable on and the monthly direct debit current. A lack of league would certainly hurt, but it would in now way be terminal.
Because pay TV is like smoking. Easy to get started, eighty bucks a month, and pretty hard to stop.
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