The lucrative broadcast rights deal signed earlier this year by the AFL demonstrates the pulling power of “live” sport in a TV market which is increasingly becoming fragmented by more choice on more platforms.
Channel 7, Telstra and pay-TV broadcasters Foxtel and Austar collectively agreed to hand over $1.25 billion over the next five years for the privilege of broadcasting AFL matches from 2012 to 2016.
The breakdown of the deal means Channel 7 will show four matches per round. Telstra won the right to stream all matches “live” on mobile phones, tablets and internet TV. And the pay-TV providers took a significant step to claiming more of the sports broadcasting audience by securing a deal to broadcast all nine matches per round “live”.
The AFL hit pay dirt with the deal, with its broadcast rights now worth $470 million more than the previous five-year agreement.
But it also underlines the pulling power of “live” sport at a time when TV viewers have more channels to watch and not at times previously dictated by the rigid TV program guide.
All the major networks in Australia now provide “on-demand” viewing options. “Time-shifting” and “catch-up TV” are becoming part of the TV viewing vernacular, with people now able to download episodes of programs they weren’t able to watch on the original broadcast.
So, at a time when we have choice – “more” than necessarily “better” – the preparedness of the broadcast partners to pay well over the odds for TV sports rights is telling for a number of reasons.
Sport offers broadcasters a mass audience. In the days before Master Chef, sport dominated the most-watched programs on TV every year. The AFL and NRL grand finals, the State-of-Origin rugby league series, and the Australian Open tennis final always featured among the highest rating shows on TV in any given year. The sport dominance was emphasised even more so during an Olympic year.
And while these were one-off events, a network’s connection with a major sporting event is seen within the industry to create the so-called “halo effect”; that is, other programs and even news coverage are created, which helps a network brand itself as the place to watch content related to a particular sport.
The halo effect was highlighted in a report by Goldman Sachs which found that Channel 7’s audiences were down by 20 per cent from 2002-06 when the network lost the AFL rights to Channel 9.
But apart from the price tag, another significant development in the AFL rights deal was the agreement by Channel 7 to allow Foxtel and Austar to broadcast every match, except the grand final, “live”. It means 7 and Fox Sports will go head-to-head on four matches every round.
Channel 7 has stated publicly it doesn’t believe the dual broadcasting will affect its audience share, but it is a significant breakthrough for pay-TV operators trying to gain a stronger hold in the sports broadcasting market.
The reality is sport is the main driver for pay-TV subscriptions. More than 70 of the top 100 programs on pay-TV in 2010 were sporting broadcasts.
Pay-TV operators want and need more sporting content, which has led to intense lobbying around the federal government’s imminent release of the new anti-siphoning list.
The free-to-air networks are staunchly defending their insistence that the premium sporting events should be available to all households. And the subscription TV lobby knows its penetration into Australian homes – which OzTam puts at just above 30 per cent – will only grow with quality sporting content.
We will see in the coming years how much the pay-TV operators are prepared to pay to achieve a greater share of TV sports broadcasting.
The rights for the NRL (2012), cricket and football/soccer (2013), and tennis (2014) are all up for negotiation, and the competitors have shown in the AFL deal that they are prepared to pay for “live” sport.
The configuration of those deals is also likely to change with the national broadband network likely to expedite the changing media habits of consumers from traditional TV to PCs, mobiles and tablet devices.
But regardless of how and where we watch, it is ‘live’ sport which remains the reliable drawing card for audiences and media outlets alike.