Pundits question lack of digital in Nine's NRL deal

By By David Blight | 22 August 2012

Amid predictions Telstra will take digital rights for the NRL, pundits have scrutinised Nine's traditional broadcast deal and asked if the lack of digital will impact the network moving forward.

Meanwhile, the industry has been awash with talk that Nine will lose money on the arrangement. The deal for 2013-2017 is significantly higher than the previous deal, and in a tough ad market it will prove difficult for Nine to recoup the money.

This morning Seven West Media chief Don Voelte argued Nine could lose over $40 million a year on the current deal.

While it has been suggested the lack of digital in Nine's agreement could lead to further issues moving forward, particularly as the media landscape changes over the next five years, most have argued Nine “got what it wanted” out of the agreement.

Yesterday it was revealed the Nine Network and Fox Sports had reached a deal with the recently formed Australian Rugby League Commission to invest over $1 billion over the next five years for NRL broadcast rights.

While the deal has seen Foxtel secure IPTV and tablet rights for five weekly games, the rest of the digital rights - including the mobile, online and IPTV across all games - currently remain in the air.

The incumbent is Telstra, and numerous industry commentators have suggested the telco is likely to once again pick up digital rights. Telstra is a 50% owner of Foxtel, so will benefit from the IPTV and tablet deal with the NRL.

Telstra's current deal includes online and mobile bundled with the naming rights of the premiership, but the rights do not presently include live match vision on any platform.

None of the digital rights sit with Nine after yesterday's announcement. While a spokesperson for the NRL told AdNews it was still possible for Nine to bid for the digital rights, several sources have suggested Nine's rights will not extend beyond yesterday's deal.

One pundit argued the deal could cause some issues for Nine, because the media landscape could change over the next five years. This could see Nine stuck with a traditional deal, while the real winner could be Telstra if it maintains digital rights.

The pundit said this would become particularly apparent once the NBN has been rolled out, and argued Telstra is looking to lock down the larger digital sports rights market. Telstra also holds the digital rights to the AFL.

However, Maxus chief operating officer Mark McCraith held another point of view. “Nine got what it wanted. It can shore up its audiences, it can take market share. It's a smart decision. Nine has the main games, it has State of Origin, and it has brought in a partner to help cover the costs.

“If the costs are 50/50, and Nine gets the main games, then it would have to give something back to Foxtel, which would be those IPTV rights. In terms of the other digital rights, they might be much more lucrative in the next set of negotiations in five years, but I think the real value of those rights is a while off. Sport is still a very social experience and people will still watch it on free to air."

McCraith also said the real value of digital rights is currently up in the air due to the current court case between Optus, Telstra, the AFL and the NRL. The Optus TV Now recording device previously allowed people to watch AFL matches near-live, and although a Federal Court has ruled this breached the copyright of digital rights holder Telstra, Optus is appealing the decision.

Meanwhile, another media buyer told AdNews: “There could potentially be some issues moving forward with Nine not having digital rights. But really, they are in it for the here and now. They have already spent a whole lot of money, and they are not going to spend even more on an unknown, particularly with their debt situation.

“Also, Nine doesn't outright own Ninemsn, so would have to make some type of deal with Microsoft if it wanted the digital rights. That may have also posed a problem.”

While commentators have argued Telstra will most likely take the digital rights deal, a spokesperson for the NRL said a range of parties have jostled for the business.

Nine had not provided comment at the time of writing.

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