Colin Smith, Managing Director Global Media and Sports, is ace at these deals
Tennis Australia hunt new TV rights
Ross: Let’s go to something else in regards to sport because, in fact, you talk cricket. Those rights will be up for negotiation sometime very shortly. You just wonder whether Cricket Australia can hang out until Channel Ten is back on its feet and in a position to be able to bid. As you’re well aware, it was likely that News Corporation, as I said earlier, being given the right to take over Ten, that it might have been able to then mount significant challenges to try and win some of the football codes and/or cricket as well.
Tennis right now is with the Seven Network, historically, its home. Right now, Tennis Australia has decided to open up its TV rights talks right now to try and see what sort of a deal it can pick up. Seven West Media currently holds a deal. It’s a $200 million free-to-air, pay-TV, and digital right to five-year deal. It expires after the Australian Open in January 2019. Colin Smith is a really good person to talk to about this because he has negotiated some of these rights before. He’s the managing director of Global Media & Sports and is on the line right now.
Many thanks for your time, Colin.
Interview with Colin Smith, Managing Director, Global Media and Sports
Colin Smith: Thank you, Ross. Great to talk to you.
Ross Greenwood: In this regard, just explain, this is a pretty interesting thing to see where the appetite for the free-to-air networks is. Because we’ve heard talk in the past that some of these sporting bodies are starting to get ahead of themselves and really think there’s big money coming through the door. Of course, if these sporting codes are not performing — Here, you could say rugby union, even cricket to a certain extent. Tennis is not necessarily performing in terms of Australian performers. The Olympics is another one. Quite clearly, the broadcasters are not as keen to really have the appetite to pay big dollars for them.
Colin Smith: There’s been huge growth over the last 15 years in the cost of media rights worldwide, especially in Australia. We’ve seen massive increases for the NRL and for the AFL. It would be fair to say now that the rights are soon to come up for both cricket and tennis. They’re rubbing their hands with glee thinking they can share in the same spoils that the NRL and the AFL have had.
Ross Greenwood: Given the fact that there is only a finite amount of money and also air space that the free-to-air networks can provide, how do they manage? Because in some cases, they seem to be almost going into collaboration with Fox Sports to be able to afford the broadcast rights. Indeed, the sporting codes know about this and are almost banking on that to provide the money that they require to pay players and to make certain that the game develops.
Colin Smith: One of the discussions that’s happening — You’re absolutely right what you’re saying. There is discussion, “Are we reaching a tipping point in terms of the value of rights?” What we know that what drives media rights and what the broadcast will pay is where it guarantees TV audiences. If TV audiences fall off, then the broadcasters are less keen to pay significant rights fees. The only caveat to that is when there’s real competitive rivalry.
Ross Greenwood: Because that’s the issue, isn’t it? Because if, let’s say, for example, it’s been happily carved up in the past. You’ve got Rugby League is on Nine. You’ve got AFL is on Seven. The issue was always if you’ve got a strong Ten. It comes in and tries to bid against the other two. Then you’ve got the competitive tension to actually perhaps push the prices up. Then in some cases, it’s exactly what the sporting codes are looking for.
Colin Smith: That’s where, frankly, I could imagine the CEOs and the boards of both Tennis Australia and Cricket Australia were celebrating with the likely acquisition subject to a government approvals of the creditors of CBS acquiring Channel Ten.
Ross Greenwood: Then you’ve got other issues such as the argument inside the sport itself. Because the sports, the administration, the players are all funded by the televisions rights. It’s not really the gate receipts or anything like that. It’s actually the money that they can get through the door from these big television deals. You’ve had a big argument about pay in Cricket Australia.
You’ve had issues about where the money should go to inside rugby union. You’ve had some at the edges, although they seemed to have settled it down a little bit, about the NRL and the players there. The AFL seems to be the one that’s got its house in order most in regards to the rights and the way in which the clubs and the players are treated. It’s almost a money-grab in some ways from every player inside the sporting goods.
Colin Smith: The problem is that just can’t be continuing the same pace. People have got to start thinking about — The sports have got to start looking at, “How do we actually maintain our sport?” Make sure that our players are well-looked after, but also, what is just as important the fan is looked after. You could see in the future rights, the entry of paid television. We’ve got the highest regulated market in the world with that ensures that the Australian fan gets most of the premium sport on free-to-air. I could see tennis.
The possibility of that moving on a streaming service, i.e. like Optus or Telstra, or it could be alongside Fox Sports. Similarly with cricket. CBS is a big game-changer because they are very large in the United States as a sports broadcaster. Last year, they acquired the premium college basketball, which is called March Madness, for US$8.6 billion up to 2032. They know, they understand the business of sport and broadcasting.
Ross Greenwood: Tell you what, it’s going to be interesting to watch exactly how that works because there is no doubt right now. Tennis Australia trying to get in ahead of any of the cricket rights because there is a finite amount of money going around. Media executives already talking about the fact that maybe there is not enough money to go around to all these sporting codes, and then the pressure is on the administrators of that sport to make certain that their teams or their players are competitive.
Because bear in mind that you’d buy a lot more for the tennis here in Australia if you could be guaranteed an Aussie in the semifinal. There’s no doubt about that. The same thing, unless you got a competitive cricket team or a competitive NRL season or whatever it might be, ultimately, that’s the key to try and get these sports rights as high as you possibly can.
It was great to have you on the program. Colin Smith, the managing director of Global Media & Sports. He’s been there and negotiated these deals in the past. Colin, we appreciate your time tonight.
Colin Smith: Thanks, Ross. Much appreciated.
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