Hugh Marks warns Nine may walk away from NRL

Nine boss Hugh Marks says the network may walk away from the NRL code as Nine looks to save $50m in sports rights deals.

Nine Entertainment CEO Hugh Marks. Picture: AAP

Nine Entertainment boss Hugh Marks has declared he has “no deal” with the NRL over broadcast payments for the 2020 season, warning of a willingness to walk away from the code as the network looks to save $50m in sports rights deals.

At Tuesday’s Macquarie investor conference Nine Entertainment chief executive Hugh Marks revealed the network’s free-to-air television revenue dropped nearly 30 per cent in April and outlined even tougher cost savings plan of almost $300m.

Mr Marks said there was “no deal” with the NRL over how much they would pay for broadcasting rights this year and said the network would financially benefit from the season not proceeding.

“It’s a sad statement that if the NRL proceeds it will be a net negative to our results,” Mr Marks told the conference.

“There is no agreement on value or for how long,” Mr Marks said.

In March Nine told the market it would save $130m on the assumption that the NRL season would be cancelled. Nine also openly criticised former NRL boss Todd Greenberg’s handling of the league before his resignation as chief executive in April.

The current $1.8bn deal between the NRL and broadcast partners Nine and Fox Sports runs to the end of 2022. Both Nine and Fox Sports asking NRL chairman Peter V’landys for a reduction in the payments this year given less rounds will be played and no crowds.

Nine has reportedly asked to pay $90m for this year’s rights from the previously agreed $118m.

According to Monday’s presentation Nine expects to save $50m in broadcast rights of NRL and remaining cricket rights — including the Twenty20 World Cups — by the end of the 2021 financial year.

Mr Marks would not detail how much the broadcast rights deal with the NRL would be worth but warned the NRL they would have to demonstrate better value to the network or Nine could walk away.

“It’s not a given that NRL has to be part of our future,” Mr Marks said. “It has to just pay its way like all of our content does, and if it doesn’t, well … again, we are less reliant on that as a revenue source.”

While Mr Marks said he wanted to “get out of the way” to allow the NRL to restart the season that was the only agreement that he had made.

“We have to be hard … we have agreed to nothing this year.

Nine previously announced a 12 month cash cost savings plan of $266m, Mr Marks said that figure had now blown out to $289m, with another $150m to be saved over three years in a “structural cost out program” in free to air television — much of that to be made on sports rights.

The Nine boss said COVID-19 had forced an industry-wide reconsideration of the value of sports rights.

“COVID has changed the need to consider sports rights.

“They’ll be in for a rude shock in two years, … now is the time to make these sports rights more sustainable,” he said.

Mr Marks said confirmed that Nine and broadcast partner Foxtel had looked at managing the NRL’s digital platform, which he said added unnecessary cost and competition for Nine and Fox Sports.

“The rationale was you’re spending a lot of money in the NRL on your own digital team, but we’ve got a digital team and Fox Sports has a digital team,” Marks said.

“Surely it would be better if we just relied on what the broadcasters were already doing rather than going into competition and creating a whole other cost base on top of what already exists. We know what the NRL needs, which is a direct communication with their fan base.

Nine’s free-to-air revenue in April was down 28.8 per cent despite maintaining the number one position in ratings, largely thanks to the performance of its hit show Married At First Sight. Mr Marks attributed 9 per cent of that decline to the postponement of the NRL season.

Third quarter revenue for Nine’s FTA business was down 9.5 per cent but the network still has a strong revenue share of 44 per cent in a tough market.