Nine paid too much for rugby, says Seven boss James Warburton

Nine Entertainment dropped the ball with its $100m investment in rugby, according to Seven boss James Warburton.

Nine announced earlier this month that it had signed a deal with Rugby Australia to broadcast the sport via its streaming platform Stan. Picture: Getty Images

Nine Entertainment dropped the ball with its $100m investment in rugby, according to Seven boss James Warburton, who says not only did the network pay too much for the three-year deal, but they “picked the wrong sport”.

The swipe follows Nine’s announcement earlier this month that it had signed a deal with Rugby Australia to broadcast the sport via its streaming platform Stan. In unusually frank remarks, Mr Warburton also accused Nine of driving up the cost of sports broadcast rights.

“I think they’ve picked the wrong sport. At $100m (cash and contra) over three years, plus production for something that is incredibly niche, that is a massive bet,” he told The Australian in an exclusive interview.

Seven West Media CEO James Warburton.

Mr Warburton, who recently secured a five-year free-to-air television broadcast rights deal for Seven to cover Supercars, said Nine would have been better off making a play for the popular racing sport.

“If you look at the overall digital numbers, something like Supercars would have been a much, much better and probably cheaper proposition for them,” he said.

Seven’s chief executive, who has been working to overhaul his network’s operations with asset sales, and content-led growth via reality shows such as Big Brother and SAS Australia, said Nine and Stan Sport were seeking to “go to war” with Foxtel and its sport streaming platform Kayo.

“Nine and Stan … are driving up sports pricing. Nine has always said … ‘don’t drive it up, can’t afford to pay for it’. They’re now making contact with all the sports, and they’re trying to drive prices up,” Mr Warburton said.

Stan, which is run by Mike Sneesby, is set to start broadcasting sports for the first time under Stan Sport, starting with rugby in February, followed by tennis Grand Slam tournaments.

Nine’s move into sports streaming comes as the board seeks to replace CEO Hugh Marks, who stunned the industry recently with news of his departure. Mr Sneesby and Nine’s digital and publishing boss Chris Janz are widely seen as the frontrunners for the top job, which was held by Mr Marks for five years.

Mr Warburton said Mr Marks will leave a “great legacy and has truly transformed the business”, but his replacement could be in for a bumpy ride.

“I think he will be sorely missed, I’m not convinced the transition will be a smooth one.”

Mr Warburton said he was looking forward to 2021, given some key content acquisitions for Seven, including singing competition show The Voice, which had been on the Nine Network since 2012.

“As you can see with something like The Voice, we’re very opportunistic in terms of what we’re doing and how we do it,” he said.

“There is also an insatiable appetite for streaming with drama, US content, a lot of reality programs, and that’s where we’re making hay and that’s what we’re going to continue to focus on,” he said, referring to Seven’s popular broadcast video on demand service, 7plus.

Seven recently secured a five-year free-to-air television broadcast rights deal to cover Supercars. Picture: Getty Images

Mr Warburton also ruled out more job cuts at the Kerry Stokes-controlled media company, noting it laid off 20 per cent of its staff within the TV business during the past financial year.

“There’s certainly no plans of more redundancies,” he said.

Since taking the helm more than 15 months ago, Mr Warburton has sold Seven’s radio and magazines business, plus two properties, raising around $150m in the 2020 financial year. Seven also bought a cornerstone 14.9 per cent stake in regional broadcaster Prime Group last year in December after its $64m takeover offer failed following staunch opposition from Prime’s major shareholders, Antony Catalano and Bruce Gordon.

The sale proceeds have helped cut Seven’s net debt to $398m at the end of June from $564m a year earlier. That compares with Nine’s net debt of $291.2m.

“We’ve maintained a vigilant process on working down our debt. We have had $150 million in asset sales already this year and we continue with three well advanced processes,” Mr Warburton said.

“We can certainly see a path to having the debt at an acceptable level. Although impossible to predict at this stage, market improvement will continue to see us generate more cash to offset the debt, as will cycling through one-off uneconomic contracts such as the Olympics.”