Nine Entertainment has branded its current deal with the NRL "unsustainable", saying the television network has received no value so far from the money it has already paid for broadcast rights this year.
The rugby league has a $372 million a year, five-year deal for broadcast rights running to 2022, and is currently trying to create a shortened season working within restrictions imposed during the coronavirus crisis.
But the sport code has no deal yet on fees for broadcast rights.
“At this point in time, we've agreed to nothing,” Marks told a virtual Macquarie Bank conference.
“There’s been no agreement yet on value, what the future rights might look like or for how long,” he says. “These are things that still remain to be resolved.”
Nine has already told the market it will save $130 million this year if the suspended season remains in hibernation. The media group has identified $289 million in costs to be cut, including fees to the NRL.
The savings are critical at a time when advertising revenue is falling during the economic fallout from the pandemic.
Marks told the Macquarie conference that free-to-air television revenue in April fell 29.8% compared to the same month last year. And May television ad revenue is looking to be even lower than April.
Nine, like the rest of the media industry, is seeing rapid change in the advertising market from the economic infection of the coronavirus. Nine in March withdrew its profit guidance because of uncertainty.
Marks made it clear to the Macquarie conference that the glory days are over for sports codes selling broadcast rights to their games.
"It's not a given that NRL has to be part of our future," he says. "It has to pay its way like all of our content does."
Nine wants to cut the amount it pays if the NRL goes ahead with its light season.
Marks says the fees paid for sports rights were already becoming unsustainable before the coronavirus crisis.
“Now in this environment, it's certainly become unsustainable and all broadcasters are looking for change and sports are just warming themselves up to the fact that it may be changed,” he says.
“COVID has changed how you need to consider sports rights and how you evaluate them for the future."
Marks says there probably would be a rude shock if the current contract with the NRL was allowed to run for the next two years.
“Now is the time when we need to make the changes necessary to make these sports rights more sustainable.
“In the current year we have already paid 25% of our rights fee and obviously we haven’t received anything near that in value.”
He urged the NRL to look at its cost base to create a sustainable model.
“If we want to move to a sustainable model going forward, it's a very easy solution,” he says.
“For us as a business, we have to be pretty hard on this.”
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