Broadcasters switch their focus to a cutting cricket’s fees

Broadcasters will now turn their attention to cricket and seek a reduction in rights fees for the summer sport.

Cricket Australia will be the next target for broadcasters seeking a review of their rights fees following the COVID–19 pandemic. Picture: Michael Klein

Broadcasters will now turn their attention to cricket and seek a reduction in rights fees for the summer sport, after achieving about $300m in savings from what they pay to the AFL and NRL.

Cricket Australia will this year enter into the third season of a record six-year $1.18bn domestic broadcast deal with Seven West Media and Foxtel but broadcas­ters have already indicated they want to renegotiate the deal in light of the media landscape.

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But if the broadcasters achieve similar savings to that for the football codes, cricket may receive $25-35m less per season from the upcoming summer onwards.

Seven late last week managed to re-cut its AFL rights deal until 2022 as well as extending the contract to the end of 2024. It told the ASX it expects to save $87m until 2022, though that figure could be more than $120m through to 2024 including production and other associated costs based on the previous value of its contract.

It is paying $730m cash and contra for the AFL over the next five seasons, with the contra component believed to be up to $50m.

The free-to-air network is understood to have negotiated a cut in its AFL fees of up to 17 per cent and will almost certainly seek some savings on the rights fees it is paying for cricket and the Tokyo Olympics, which have been delayed until 2021.

Similarly, Foxtel struck a deal to pay about $90m less for AFL rights for the next three years through to the end of 2022. It also negotiated substantial savings on its NRL deal and extended that contract until 2027.

When asked if cricket was next on the broadcaster’s hit list, one network executive told The Australian: “Yes, 100 per cent.”

Seven is paying about $75m cash for the cricket rights and $7m contra every year, for a contract that lasts until the end of the 2023-24 summer season. The amounts are paid in three instalments between September and March each season. Foxtel pays almost exactly $100m in cash in the same period and about anoth­er $10m in contra arrangements.

After lower-than-expected ratings, Seven reportedly attempted to sell its share of the cricket rights to rival Ten Network earlier this year, only to be rebuffed.

But in a clear sign the network believed the rights to be more expensive than their value, Seven took a $52m provision on onerous contacts, including its cricket deal, when it announced its half-year financial results in February.

In an email from Cricket Australia management to The Australian Cricketers Association in early June, the governing body indicated that broadcasters may ask for a discount on their contracts.

It said “Australian Cricket Rev­enue” could fall by $240m over the next two summers from previous forecasts due to crowd restrictions, lack of stadium income and “reductions in the value of commercial and broadcast assets”.