Toots Hibbert
30 Dec 2005, 10:30
Rivals set to trump Nine's AFL bid
The Australian
John Lehmann and Michael Davis
30dec05
KERRY Packer's final business play - an audacious $780 million bid for AFL television rights - is set to fail, with his rival, Seven Network owner Kerry Stokes, finalising an offer to wrest the contract from the Nine Network.
Seven and its partner in the bid, Network Ten, yesterday indicated a matching offer will be submitted by Thursday, while writing to the AFL asking for further details of the Packer-endorsed deal.
A Ten source said the bid partners only needed to find another $15 million a year in cash to match the offer, which would force the AFL to award the rights due to a "last-option" contract held by Mr Stokes.
"Do you seriously think we'd give up the right to broadcast AFL for that amount of money? It's an open-and-shut deal," the Ten source said.
The Seven-Ten first offer in this round of negotiations is understood to have been about $615 million, most of it in cash.
The deal put by Nine, which is partnering with pay-TV operator Foxtel - part-owned by News Limited, publisher of The Australia - is made up of $680 million in cash and $100 million contra.
Seven communications executive Simon Francis said Seven was "delivering without the AFL and there's no doubt we'd be even more competitive with the television rights to the AFL".
But he said the network would "let our heads, not our hearts, make the final decision".
Seven, which lost its 46-year association with Australian rules football in 2001 after falling out with the AFL, finished only 2.1 rating points behind perennial leader Nine this year.
Executives think the AFL would be worth between one and 1 1/2 ratings point over a year, giving Seven a critical boost in its quest to finally beat Nine.
While the deal would be loss-making, Seven and Ten - whose respective chief executives David Leckie and Grant Blackley met to thrash out the matching bid in Sydney on Wednesday - could expect to write about $60 million in advertising revenue against the AFL each year.
And each ratings point is estimated to be worth between $30 million and $35 million in extra revenue a year, not to mention the premium that advertisers are willing to pay for delivering the biggest audience.
Sources close to Nine described their situation as "win-win".
"If we get the rights great, if we don't, we watch Seven and Ten spend more money than they can afford," one insider said.
Foxtel, which was contributing close to $50 million into the Nine bid to cover four exclusive games, would be likely to pay less than half that amount for the three least popular games that Seven would be likely to on-sell.
It is vital to Ten, which partnered Nine in the AFL since 2002, to retain the rights, as its audience is expected to come under severe pressure next year.
Ten told the AFL it was prepared to broadcast Saturday night AFL games in Sydney and Brisbane live from 2007, even though its advertising revenues are expected to be substantially hit if it retains the rights.
Relations between Seven and the AFL have been poisonous over the past year, when Mr Stokes insisted the commission be sued as part of his claim for $1.1billion in damages against the rest of the television industry.
Although the Seven-Ten bid offers the AFL more coverage on free-to-air television, AFL chief executive Andrew Demetriou has made no secret of the fact that Nine is his preferred broadcaster.
http://www.theaustralian.news.com.au/printpage/0,5942,17688952,00.html
The Australian
John Lehmann and Michael Davis
30dec05
KERRY Packer's final business play - an audacious $780 million bid for AFL television rights - is set to fail, with his rival, Seven Network owner Kerry Stokes, finalising an offer to wrest the contract from the Nine Network.
Seven and its partner in the bid, Network Ten, yesterday indicated a matching offer will be submitted by Thursday, while writing to the AFL asking for further details of the Packer-endorsed deal.
A Ten source said the bid partners only needed to find another $15 million a year in cash to match the offer, which would force the AFL to award the rights due to a "last-option" contract held by Mr Stokes.
"Do you seriously think we'd give up the right to broadcast AFL for that amount of money? It's an open-and-shut deal," the Ten source said.
The Seven-Ten first offer in this round of negotiations is understood to have been about $615 million, most of it in cash.
The deal put by Nine, which is partnering with pay-TV operator Foxtel - part-owned by News Limited, publisher of The Australia - is made up of $680 million in cash and $100 million contra.
Seven communications executive Simon Francis said Seven was "delivering without the AFL and there's no doubt we'd be even more competitive with the television rights to the AFL".
But he said the network would "let our heads, not our hearts, make the final decision".
Seven, which lost its 46-year association with Australian rules football in 2001 after falling out with the AFL, finished only 2.1 rating points behind perennial leader Nine this year.
Executives think the AFL would be worth between one and 1 1/2 ratings point over a year, giving Seven a critical boost in its quest to finally beat Nine.
While the deal would be loss-making, Seven and Ten - whose respective chief executives David Leckie and Grant Blackley met to thrash out the matching bid in Sydney on Wednesday - could expect to write about $60 million in advertising revenue against the AFL each year.
And each ratings point is estimated to be worth between $30 million and $35 million in extra revenue a year, not to mention the premium that advertisers are willing to pay for delivering the biggest audience.
Sources close to Nine described their situation as "win-win".
"If we get the rights great, if we don't, we watch Seven and Ten spend more money than they can afford," one insider said.
Foxtel, which was contributing close to $50 million into the Nine bid to cover four exclusive games, would be likely to pay less than half that amount for the three least popular games that Seven would be likely to on-sell.
It is vital to Ten, which partnered Nine in the AFL since 2002, to retain the rights, as its audience is expected to come under severe pressure next year.
Ten told the AFL it was prepared to broadcast Saturday night AFL games in Sydney and Brisbane live from 2007, even though its advertising revenues are expected to be substantially hit if it retains the rights.
Relations between Seven and the AFL have been poisonous over the past year, when Mr Stokes insisted the commission be sued as part of his claim for $1.1billion in damages against the rest of the television industry.
Although the Seven-Ten bid offers the AFL more coverage on free-to-air television, AFL chief executive Andrew Demetriou has made no secret of the fact that Nine is his preferred broadcaster.
http://www.theaustralian.news.com.au/printpage/0,5942,17688952,00.html