$700 million TV offer from Seven-Ten bid

[WilliamPowell]

Payback time for Demetriou
ANALYSIS, By Caroline Wilson
December 24, 2005


On the face of it Kerry Packer, with not a little help from Rupert Murdoch, has delivered Andrew Demetriou the ultimate Christmas present - a $780 million five-year broadcasting deal, which has turned the AFL chief into a hero in the eyes of his 16 clubs and destroyed the festive season for the Seven and Ten networks.
T
he mood among club presidents during their telephone hook-up at 1.30pm yesterday was largely ecstatic when Demetriou and his chairman, Ron Evans, delivered the news that Channel Nine had delivered in a big way. Although Sydney and Brisbane were waiting for the fine print, and several other club leaders wanted to make sure their players would not be taking all of the proceeds, this was a moment for celebration.

The annual cash component from Nine, which seems certain to split its next five-year deal with Foxtel - meaning that half the home-and-away games from 2007 will have to be paid for if you want to see them - has been estimated at between $130-$135 million per season.

The $780 million figure trumpeted by the AFL, which includes an estimated $80 million in unspecified marketing and advertising revenue, means that Channels Seven and Ten, which have jointly offered an estimated $10 million less per season in cash terms, will have to find up to another $50 million to match the Nine offer.

Either way the clubs will benefit financially and Evans made it clear yesterday that when it came down to coverage versus cash, cash was king. The league has not only removed its potentially costly legal costs from Channel Seven's litigation against it from its books, but it will come close to receiving almost 50 per cent more in the next broadcast rights deal.

The AFL was not clear on everything, however. While the infamous regional black hole, which removed Friday night football from free-to-air TV in key areas in NSW and Queensland in the last agreement, was always meant to be rectified this time, that now appears less certain. Foxtel will televise Friday night games live into both those states and their capital cities, but Nine's regional affiliate, WIN, remains committed to rugby league, so the offers of Prime TV and Southern Cross Television in the Seven-Ten consortium of prime time Friday night coverage cannot be matched by Nine.

It is believed that Nine's four games will cover Friday nights, Saturday afternoons, Saturday night and Sunday afternoons. Rather than boasting prime time free-to-air coverage into Sydney and Brisbane on Saturday nights, Nine will delay those fixtures until 9.30pm.

Clearly there is a serious degree of contempt for Seven and Ten from Demetriou and his commission, which is not surprising.

Demetriou still feels Ten tried to con the AFL and screw down the price of the broadcast rights when it switched camps and climbed into bed with Channel Seven, which was suing the AFL.

Demetriou holds grudges and yesterday for him was payback time. Not only were Seven and Ten executives kept in the dark regarding any imminent offer, they learnt of yesterday's announcement via a newsroom press release. The Publishing and Broadcasting Limited winning bid was delivered to the camps that own the right to match the bid about 4pm on the last office day before Christmas.

Seven and Ten were meeting today to devise their next move. Clearly the question on everyone's lips was whether they would fight. The mood from the clubs was that it is all over.

For the sake of the game you would hope that the ill-feeling between the AFL and those two free-to-air outlets improves should they match Nine's offer, which, while impressive, does not boast the insurmountable gap between its rivals that the Nine/Ten bid did last time.

http://theage.com.au/realfooty/news/afl/payback-time-for-demetriou/2005/12/23/1135032185228.html

[WilliamPowell]

The mood among club presidents during their telephone hook-up at 1.30pm yesterday was largely ecstatic when Demetriou and his chairman, Ron Evans, delivered the news that Channel Nine had delivered in a big way. Although Sydney and Brisbane were waiting for the fine print, and several other club leaders wanted to make sure their players would not be taking all of the proceeds, this was a moment for celebration.

let's see how ecstatic they are when they are not on FTA TV and as a result lose sponsors because they are not getting enough national exposure.

These people need to get the $$$$ signs out of there eyes and look at the big picture

Demetriou holds grudges and yesterday for him was payback time. Not only were Seven and Ten executives kept in the dark regarding any imminent offer, they learnt of yesterday's announcement via a newsroom press release. The Publishing and Broadcasting Limited winning bid was delivered to the camps that own the right to match the bid about 4pm on the last office day before Christmas.

What was it I was saying about ethics and a bad taste and smell ???

Call it whatever you like - that is disgraceful business practice

[WilliamPowell]

WHAT THE AFL GETS NOW

■ Five-year deal from Nine, Ten and Foxtel worth $400 million in cash.
■ Five matches split between Nine and Ten, three on Foxtel.
■ Live Saturday night games into Brisbane. Delayed Friday night coverage into Sydney and Brisbane.
■ Limited finals into NSW, Qld.

WHAT THE AFL REJECTED
■ Five-year deal from Seven and Ten estimated at $740 million.
■ Five games a week on free-to-air and three on Foxtel.
■ Guaranteed nationwide live coverage of Saturday night games.
■ Live Friday football into all regional centres of NSW, Qld and NT.

WHAT THE AFL HAS AGREED TO
■ Five-year deal from Nine valued at $780 million.
■ Four games a week on free-to-air with option for four on Foxtel.
■ Improvements in Qld, NSW.
■ Free-to-air coverage on Friday and Saturday, possible free-to-air double-header on Sunday.

http://www.theage.com.au/realfooty/news/afl/footy-war-nine-lodges-780m-bid/2005/12/23/1135032185733.html

===================

What more needs to be said? Shame AFL shame

Footy fans have been sold out again - to all my friends and family in Wagga Wagga - it's the same old same old.

Please oh please channels 7/10 match the $$$ - the coverage side of things is already better than the other offer

[cub]

Please oh please channels 7/10 match the $$$ - the coverage side of things is already better than the other offer

Even if they do or then again better it, I doubt they would get it anyway. Just a gut feeling. 

Quote
Demetriou holds grudges and yesterday for him was payback time.

That is NOT how you run a business - Time for a change at AFL house.

 

[Razorblade]

Can the AFL still reject the bid if they match the offer financially?

[mightytiges]

Can the AFL still reject the bid if they match the offer financially?

There's cash + contra (tv timeslots for promotional stuff) involved in these bids so Seven/Ten have to match the "value" of PBL's offer of reportedly $700m is cash and $80m in contra. It seems Seven/Ten are about $75m short and unlikely to match it. Seven's shares apparently when "up" on the news of yesterday's announcement. If they did match PBL's offer though and Andy D still rejected it, this could get very messy next year as the parties could end up in court again.

[mightytiges]

The mood among club presidents during their telephone hook-up at 1.30pm yesterday was largely ecstatic

let's see how ecstatic they are when they are not on FTA TV and as a result lose sponsors because they are not getting enough national exposure.

These people need to get the $$$$ signs out of there eyes and look at the big picture

I wonder if ours was thinking that there'll now be a extra million or two in the AFL dividend to the clubs so the club can pay off the overdraft in 4-5 years timeframe set out.

I know we haven't down ourselves any favours on-field in regards to getting good FTA coverage but sheesh we were punished severely and moreso than other clubs with similar performances. One lousey friday night away game this year despite a new respected coach coming in because the draw was based on the last two years under Frawley yet Collingwood can play equally boring footy in the past two years with poor ratings and still end up with 4 Friday nighters in 2006 on par with us .

[WilliamPowell]

Can the AFL still reject the bid if they match the offer financially?

No they can't - under the last right to bid as long as 7/10 match all parts of the PBL offer the AFL must accept it. They (7/10) can of course better the PBL offer (which coverage wise they already have  ) by $1 and the AFL must accept

There's cash + contra (tv timeslots for promotional stuff) involved in these bids so Seven/Ten have to match the "value" of PBL's offer of reportedly $700m is cash and $80m in contra. It seems Seven/Ten are about $75m short and unlikely to match it. Seven's shares apparently when "up" on the news of yesterday's announcement. If they did match PBL's offer though and Andy D still rejected it, this could get very messy next year as the parties could end up in court again.

Going by what Caro wrote in Saturday's Age (and it was one of her better editorials I must say ) the $$$ portions of the offers are not that far apart it seems the contra (free tv advertising) is the part 7/10 have not matched. The business section in the HUN on Saturday backed this claim. They went as far as to say the contra in the PBL offer could be as much as $100 million - struth that's alot of late night advertising.

As I said as long as 7/10 match the PBL offer the AFL are legally required to accept.

Now wouldn't that be a wonderful sight Andy D, Big Kerry and Eddie Mc sobbing in a corner somewhere after 7/10 throw the final punch 

[mightytiges]

On BF and Bomberblitz it's claimed the difference b/w the two bids in $187 million because the Seven/Ten offer is over six years not five:

So what is on the table now

9 & Fox

$700 million cash + $80 million contra

7 & 10

$616 million cash + $124 million contra (OVER 6 YEARS)

broken down to over 5 years however

$513 million cash + $103 million contra

7 & 10 need to boost their cash bid component by 36% to match the 700/80

[WilliamPowell]

I've read the comments on BF by Tigger and how much he/she reckons 7/10 has bid and to be honest unless they work at AFL house, ch 9, ch 7, ch 10 or foxtel  I don't think they have any idea. The media Caro and Damien Barrett from the HUN would have a better idea.

Demetriou told Seven and Ten executives in a curt meeting yesterday that their offer was unacceptable. It featured a revised five-year deal with a cash value of close to $600 million and unprecedented free-to-air coverage into Sydney and Brisbane.

The above is what Caro wrote on either 20 or 21/12/05. Barrett from the HUN agreed with the figures she printed. Caro is obviously being fed by 7 and Barrett was getting his info from someone at 9.

WHAT THE AFL GETS NOW

■ Five-year deal from Nine, Ten and Foxtel worth $400 million in cash.
■ Five matches split between Nine and Ten, three on Foxtel.
■ Live Saturday night games into Brisbane. Delayed Friday night coverage into Sydney and Brisbane.
■ Limited finals into NSW, Qld.

WHAT THE AFL REJECTED
■ Five-year deal from Seven and Ten estimated at $740 million.
■ Five games a week on free-to-air and three on Foxtel.
■ Guaranteed nationwide live coverage of Saturday night games.
■ Live Friday football into all regional centres of NSW, Qld and NT.

WHAT THE AFL HAS AGREED TO
■ Five-year deal from Nine valued at $780 million.
■ Four games a week on free-to-air with option for four on Foxtel.
■ Improvements in Qld, NSW.
■ Free-to-air coverage on Friday and Saturday, possible free-to-air double-header on Sunday.

http://www.theage.com.au/realfooty/news/afl/footy-war-nine-lodges-780m-bid/2005/12/23/1135032185733.html

One of thh arguements Tigger has used on BF is that it's all the 7/10 figures have come from Caro and she is biased. I think you could use the same logic with the Barrett articles

The details that was in the Age (above) was also in the Hun so - I reckon that figures that are being sprouted about by Caro and Barrett are pretty close to the mark - we will know by the 6th Jan.

Actually I was starting to think that Tigger on BF was actually Eddie McEverywhere
 

[Fishfinger]

Push to trump Packer bid for AFL TV rights
By Caroline Wilson, Christian Catalano and Malcolm Maiden
December 29, 2005
http://www.theage.com.au/news/natio...5732642184.html

KERRY Packer's final act on the Australian corporate stage — his spectacular $780 million bid to keep AFL football on Channel Nine — is in danger of failing as rivals Seven and Ten consider making a last-ditch counter-offer to snare the deal.

Less than a week after the bid by Mr Packer's Publishing and Broadcasting Limited was revealed, the rival consortium is believed to be preparing a final assault for the prized AFL broadcast rights from 2007 until 2011.

Seven and Ten executives are believed to have broken into their Christmas holidays in recent days to analyse the PBL document and decide whether to exercise their legal right to match it.

AFL chiefs announced on Friday their acceptance of the PBL bid — with every second AFL game to be presented on pay TV network Foxtel — in the absence of a better offer from Seven and Ten within 14 days.

While AFL clubs largely applauded the PBL deal and its financial rewards, the Sydney Swans and Brisbane Lions are concerned about the rights going to a free-to-air network committed in NSW and Queensland to rugby league.

Initially stunned by the size of the Packer bid, which includes a cash component of $700 million, the rival alliance now appears determined to fight on — despite the threat of slim profit margins and bad feelings that exist between the league and both Seven and Ten.

[Fishfinger]

Here's an opinion from a business point of view from a journalist/analyst:


Still the one, but not for long

By Alan Kohler
December 29, 2005
Page 1 of 2
Related coverage

   
Kerry Packer's last act as the titular head of his empire was to sign off on a desperate, futile attempt to avert the Nine Network's greatest crisis - the bid for the AFL broadcasting rights.

It will be futile, in my view, because Seven and Ten will comfortably trump the Packer group's $780 million bid and as a result Nine will slip decisively to No. 2 in the ratings within 12 months.

Kerry Stokes thought Seven could do without the footy and he was wrong, but with the help of Nine's David Leckie, Seven has stayed close enough to Nine to knock it off when it gets the AFL back - that prospect will be irresistible for Stokes and the profits from being No. 1 will easily compensate for any losses on the AFL contract itself.

http://www.theage.com.au/articles/2005/12/28/1135732638807.html?from=top5

[WilliamPowell]

Alan Kohler is a very astute business analyst - I've always enjoyed reading his views. Particularly like this one 

I've been of the belief that the TV rights are there for Chs 7/10 taking if they really want them - I am hoping they match the bid or be really generous and offer $1 extra to better it.

From a TV viewer perspective the 7/10 bid is so far superior to the PBL offer that it's not funny - simply because they can offer better FTA coverage in the markets the AFL have said previously are so important but only when the AFL deems them to be important. 

I reckon this will go down to the wire and I wouldn't be surprised to see Telstra Dome somehow coming into the equation.

What was is again that Eddie said about throwing the last punch

Time will tell but please oh please Channels 7/10 don't let us down

[Fishfinger]

AFL wants quick decision

By James Chessell and Lisa Murray
December 30, 2005
Sydney Morning Herald

THE AFL has rejected a request by the Seven and Ten Networks for extra time to work through a last-ditch counter-offer for the AFL broadcast rights from 2007 until 2011.

It is understood the consortium asked the AFL for more time yesterday but was told it must either match Kerry Packer's spectacular $780 million pre-Christmas bid to keep AFL football on Channel Nine by the original January 6 deadline or bow out of the race.

Sources close to Seven and Ten played down the significance of the decision, saying the consortium was merely seeking a "clarification" of its position. But with Seven boss David Leckie on holiday overseas until Tuesday, the consortium wanted more time. It must now reach a decision in the second half of next week.

AFL chiefs announced last Friday that they would accept the bid by Nine parent PBL, regarded as Mr Packer's final corporate manoeuvre, in the absence of a superior offer from Seven and Ten within 14 days. PBL's offer is the largest in Australian sporting history and underlines the importance of the AFL rights, with Nine and Seven locked in a fierce ratings battle.

While television insiders say Seven could manage without the AFL rights, it is generally considered that Ten needs to bolster its content.

Sources close to Seven said the network was seeking "clarification" about "the difference between the first offer we put to the AFL and a [Nine] offer that does not contain one single guarantee of live coverage in the northern markets"; and the sub-licensing agreements.

Under the offer nutted out by Mr Packer and Nine chief Sam Chisholm, up to four games a week would be broadcast on pay network Foxtel, which is 25 per cent owned by PBL. Yesterday's setback has raised doubts about Seven's commitment to matching the lucrative Nine bid - there is no doubt about Ten chief Grant Blackley's enthusiasm - with the odds slightly strengthening that Nine may retain AFL rights.

Nevertheless, the consortium said it would continue to crunch the numbers on a rival bid, despite the threat of slim profit margins and apparent ill-feelings between the league and both Seven and Ten.

According to Nine insiders, the strength of its bid is not so much in the price - about $280 million higher than the AFL's current deal - but in the scheduling requirements.

Nine is in partnership with Foxtel which allows it to commit to a gruelling schedule. It is expected that Seven and Ten, both being free-to-air TV stations, will find that difficult to match as they will be forced to commit to too many games at difficult times.

"If we win, it costs us a bit of money but it is very good for Foxtel and it cements Channel Nine's No.1 ratings position," the insider said. "If we lose, the schedule will be murder for Seven and Ten."

A Seven spokesman said yesterday there was "no rush to respond" to Nine's bid. "We'll make a decision that's in the best interests of our shareholders, our advertising partners and our viewers," he said. We look forward to the next time we speak to the AFL.

"Seven is No.1 in news and public affairs, is surging in prime time and is well-placed to continue this momentum. We're delivering without the AFL and there's no doubt we'd be even more competitive with television rights to every match played in the AFL. We'll let our heads, not our hearts, make the decision."

While the Nine deal works out to $156 million a year, it has been reported that up to $100 million of the offer is in contra for advertising and promotion. This would make the cash component $680 million, or $136 million a year.

In a note to clients earlier this week Citigroup analysts said the AFL rights were "beginning to take on poison chalice status".

"It is beginning to look ugly indeed for the 'winner' of these rights."

http://www.smh.com.au/news/business...5732692946.html

[Fishfinger]

Cash is the key
to TV rights
30 December 2005   Herald Sun
Damian Barrett

PROMISES to promote football in the black spots of the northern states will not be part of the Channels 7-10 counter bid for AFL broadcasting rights.

In a strategy that dramatically reshapes the AFL TV landscape, Seven and Ten have taken the view they need only match finances, not coverage, of the Channel 9 bid conditionally accepted by the AFL.

In its offer approved by the AFL Commission last Friday, Nine, in partnership with Foxtel and News Limited, publisher of the Herald Sun, pledged $780 million for the 2007-11 football rights.

Nine was allowed to sub-license four matches a week to pay-TV.

Seven and Ten have decided the rights were made purely a matter of money because of the AFL's decision to go with Nine.

They had been convinced their deal was superior in terms of free-to-air coverage in the black spots.

Accountants at Seven and Ten have begun financially analysing the marketplace hoping to project their status, five years ahead, based on both having and not having the football rights.

Removing the pledges to broadcast live or near live in the northern states will mean that ratings losses -- and therefore advertising dollar losses -- are not sustained in New South Wales and Queensland.

Seven initially gave consideration to including selling the management rights to Telstra Dome, valued at $150-$200 million, as part of the TV rights negotiations, but the possibility has been scrubbed.

Seven director of corporate development Simon Francis would not comment on the coverage issue last night, but said his network and Ten would remove emotion from any counter bid.

Under contractual rights to bid last, Seven and Ten have until late next week to match Nine's offer.

"Seven is No. 1 in news and public affairs, is surging in prime time and is well placed to continue this momentum," Francis said.

"We are delivering without the AFL and there is no doubt we would be even more competitive with the television rights to the AFL. We will let our heads and not our hearts make the final decision.

"There is no rush to respond to the AFL and we will make the decision that is in the best interests of our shareholders and our viewers, and we are looking forward to the next time we speak to the AFL."

The AFL has regularly stated coverage in NSW and Queensland was as important as cash in the next rights deal.

While the finer details of the coverage available under the Nine bid will not be known until Seven and Ten decide whether to counter, it is known Foxtel's signal is to be used in the northern markets.

In its first bid rejected by the AFL, Ten had planned to provide live national coverage in NSW and Queensland on Saturday nights, and Seven said it would broadcast in those states from 10.30pm on Fridays.

Nine's conditionally successful $780 million bid includes about $80 million of contra.

It was at least $75 million more than Seven and Ten had offered at the first bid stage.

The AFL said last week Seven and Ten had until next Thursday to respond to the Nine offer, but the networks are working to deadline of next Friday.

Should a counter bid be made, Seven would take three Grand Finals within the 2007-11 period, leaving two for Ten.

http://www.heraldsun.news.com.au/footy/common/story_page/0,8033,17688404%255E20322,00.html