Sports rights at ‘tipping point’ says Seven exec

Australian sports rights prices have reached a “tipping point”, says Seven West Media chief executive Tim Worner.

Recent sports deals include a record six-year $2.508bn for the AFL. Picture: Michael Klein

Australian sports rights prices have reached a “tipping point”, with no more room for huge price increases, says Seven West Media chief executive Tim Worner.

Unveiling a $745 million loss for the full year following a step up in the cost of expensive sports rights, Mr Worner warned the major codes should reconsider their expectations ahead of the next round of negotiations.

“We’ll continue to require premium content where the economics work for us,” he said. “But it is fair to say that sports rights have reached a tipping point in this country.”

“Sports rights are undeniably valuable but free-to-air broadcast also brings incredible value to these sporting codes. Given changes in the market, price rises are not sustainable.”

Mr Worner suggested the sports rights holders should rethink the underlying business model by recognising the enormous contribution made by television networks in driving awareness and raising the profile of codes through their access to millions of Australian households.

“We have to reach a position where the economics stack up for all parties and where the power and reach that free-to-air television brings to these sports are properly recognised,” he said.

A boom in sports rights in Australia and around the world reflects new viewing patterns, with viewers watching more TV live.

New competitors such as Optus are now vying for the same rights as TV networks to package them with broadband and mobile services. This has also driven up the prices networks pay for rights.

Mr Worner was speaking weeks after it emerged Amazon had bid about $82m to show ATP World Tour tennis over five years.

Speculation is rife that the likes of Amazon, Google, Facebook and Netflix want to muscle in on top-tier sports.

Recent sports deals in Australia include a record six-year $2.508 billion agreement between the Australian Football League and broadcast partners Seven, Fox Sports and Telstra, a 67 per cent increase.

The National Rugby League drove a 70 per cent jump in the price of its rights with a $1.8bn agreement with Nine Network, Fox Sports and Telstra.

More recently, Football Federation Australia signed a record six-year $346m deal to broadcast matches on Foxtel from next season. The contract is up from $240m, a 44 per cent jump.

Cricket Australia is expected to kick off negotiations over a new rights deal next year. Currently, it reaps $600m from its five-year deal.

CA is hoping a rights deal could crack $1bn from bidding tension as it looks to capitalise on the runaway success of the Big Bash League. Nine, which holds rights to international Test matches and one-day internationals, would like to poach the Big Bash League from rival Ten to add to its roster of cricket rights.

Fox Sports is also drawing up plans for an aggressive bid and has toyed with the idea of partnering with Nine to help it fund the capture of the entire package of rights.