NRL deal a ‘net negative’, says Nine’s Hugh Marks

Hugh Marks says the NRL and other sports are in for a ‘rude shock’, as Nine’s broadcast revenue slumps 30% and cost cutting ramps up.

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 $50 million in sports rights deals.

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

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

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

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

Mr Marks would not detail how much the new broadcast rights deal with the NRL would be worth, warning the NRL it would have to demonstrate better value to the network or be in for a “rude shock” in the future.

“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.”

‘It’s a sad statement that if the NRL proceeds that it will be a net negative to our results’

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

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

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

The Nine boss said COVID-19 had forced an industry-wide rethink of sport broadcast rights.

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

Nine had previously announced a 12 month cash cost savings plan of $266 million, and Mr Marks announced on Tuesday that figure had blown out to $289 million, excluding costs or possible savings from the 2020 season.

Another $150 million would be saved over three years in a “structural cost out program” in free to air television.

Nine’s free to air revenue was down 28.8 per cent in April, despite maintaining the No. 1 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 nearly 44 per cent in a tough market.

Mr Marks predicted that “May will be worse than April” but said “June will be better” with an easing of social distancing rules allowing the new season of Married At First Sight to commence filming.