Sports rights bubble bursting: Tim Worner

Australian sports rights prices have reached a “tipping point”, says Seven boss Tim Worner.

Australian sports rights prices have reached a “tipping point”, with no more room for huge price hikes, according to 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 that 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. But it is fair to say that sports rights have reached a tipping point in this country,” said Mr Worner.

“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 that 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.”

A boom in sports rights locally and around the world reflects new viewing patterns in the TV industry.

Viewers are watching more programs on-demand, skipping the ads, underscoring how live sport is immune to changes in viewing patterns.

After all, nothing keeps an Australian household away from their favourite match on TV. With all the drama and tension inherent in a big match, it must be watched live rather than later via a personal video recorder.

Live sport is therefore crucial for broadcasters to keep big audiences as audiences fragment in other programming genres. This means the top sports codes have been able to command hefty premiums from broadcasters which carry its content.

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 the networks pay for rights.

Mr Worner was speaking weeks after it emerged that Amazon bid about £50 million to show ATP World Tour tennis over five years, heightening fears among traditional sports broadcasters.

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

Recent sports deal 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 rise.

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 current five-year deal