AFL deal will keep Seven on top, says CEO

The AFL is set to pocket a cool $1.25 billion plus from a five-year broadcast deal with Seven Group Holdings Ltd and pay TV broadcasters Foxtel and Austar.

However, analysts say that Seven shareholders could be the losers as the network may have overpaid -- even though the generous programming schedule is a winner for viewers and Foxtel.

AFL chief executive Andrew Demetriou said the AFL would earn $1.253 billion from the 2012-16 deal, including a cash contribution of $1.118 billion.

In comparison, the 2007-11 deal was worth $780 million, including a cash contribution of $749 million.

Independent media analyst Peter Cox says that the deal was a loser for shareholders but a winner for consumers and Foxtel.

He said that the Seven network was not winning the ratings because of the AFL, but because of its other programs.

"I keep reading in the Melbourne papers about the halo effect from Australian Rules and I think that's a load of rubbish," Cox told AAP.

"From 1980 through to 2000, Channel Nine did not have Australian Rules, they absolutely dominated the ratings.

"Even when the Swans are playing in Sydney, no one wants to watch it ... I think Seven are blind to it. I think Kerry Stokes is so determined to have it."

Cox said that the deal worked best for Foxtel because 90 per cent of its revenue came from subscriptions and it was perfectly placed to generate the 100,000-150,000 viewers it needed to pay for the AFL.

"We don't know the amount yet, but I don't think the free-to-air component is up a huge amount, but Foxtel's is probably about $600 million," he said.

"The only reason why Foxtel can afford to pay that is because it's subscription-driven and it shows the future importance of subscription revenues in the media industry, whether it be for television, newspapers or whatever.

"The advertising cake is a very fixed cake. The TV AFL networks can't make a profit out of advertising."

Channel Seven chief executive David Leckie said on Thursday that the rights deal would ensure that the network stayed number one despite the fact that it might not make any money out of it.

Foxtel, Seven Group Holdings and Telstra (which is a 50 per cent shareholder in Foxtel) did not provide a breakdown of what each was paying, and the figures were not available late on Thursday.

Leckie said that Seven reserved the right to on-sell some of its four-weekly matches to another free-to-air network, with Ten and Nine being possible buyers.

He also said that he was optimistic about breaking even in terms of advertising revenue despite paying what is believed to be at least $475 million in cash plus advertising contra.

"This is a great deal for us and a great deal for the AFL," he told a press conference involving the AFL and broadcast deal partners.

"We're the number one network in this country and have been the last four to five years ...This is the greatest start we've ever had this year and I can't see why we're going to rolled for a long time.

"The AFL deal is going to cement us, Channel Seven, as number one for many years in a row ...That's why we aggressively chased it."

Questions are being asked about the wisdom of Seven paying so much, with analysts saying that Ten lost money from the last five-year deal.

The cheapest subscriptions to Foxtel involving sports channels cost $60 a month.

Foxtel's chief executive Kim Williams on Thursday did not rule out further price increases, but said that they would not be significant.

Cox said that he did not think it would be "a big whack" in fee increases because Foxtel needed to attract subscribers, not lose them.

Comments (1)
Apr 29, 2011
AFL is taken way too serious in this town

Like on Facebook