A body blow for TV networks as football codes suspend seasons, Olympics postponed

Australia World

Updated March 25, 2020 15:42:53

It is no exaggeration to say the AFL and the NRL are fighting for their lives after both codes made the dramatic decision to call off their seasons in the face of the coronavirus pandemic.

Key points:

  • Sports events lead the free-to-air ratings, with the first rugby league State of Origin match topping the list last year
  • Nine and Seven have both committed more than $10 million a week to broadcast major football codes
  • Media advertiser Ian Warner says the postponement of the Olympics will hit Seven’s bottom line

Both are part of a group of leading sports that are going cap in hand to the Government for help.

The AFL has sought to borrow around half a billion dollars against Docklands Stadium in Melbourne, which it owns.

The NRL has no assets, and very little money, and is in a much worse financial position.

Neither sport seems likely to emerge from the coronavirus crisis unscathed and nor do the free-to-air television networks who keep them afloat — Seven, which screens the AFL, and Nine, which has the NRL.

The suspensions will also affect Foxtel’s Fox Sports channel, which already announced redundancies in its news division last week, reportedly due to soft advertising revenue rather than coronavirus.

Big sport the only guarantee of big audiences

“Television viewership has been in decline for many years, advertising revenue has been following that trend for the last year or so, and this will just accentuate it,” media analyst Peter Cox told the ABC.

Big sport is now the only guarantee of big audiences for free to air TV.

The highest rating program last year was the first State of Origin rugby league match between New South Wales and Queensland, with 3.2 million viewers.

The AFL grand final was second, with nearly 3 million, followed by the other two State of Origin matches and then the NRL grand final.

Add in the men’s and women’s Australian Open tennis finals and the Melbourne Cup, and only two non-sport programs were in the top 10 — Married at First Sight in seventh place and Lego Masters ninth.

“Sport really is the cornerstone of each of those networks’ programming,” said Ian Warner, from media advertising firm Moonlighting.

“It delivers not only eyeballs to that programming, but it on-sells their own programming across other parts of the day.”

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Earnings and ad revenue fall alongside audience numbers

As free-to-air television audiences have fallen, so too have the networks’ earnings.

Nine’s latest profit of $102 million was down 41 per cent on the previous year, while Seven made a loss of $67 million.

Those deteriorating results are reflected in their share prices — Seven shares have lost 94 per cent since August 2018 and are now trading at just 7 cents, while Nine is off 66 per cent over a similar period.

Channel Ten is wholly owned by US TV network CBS.

Both Seven and Nine paid through the nose for football rights in a desperate bid to keep people watching, and Mr Cox said the only good news from no footy is they will save some money.

“Nine was committed to something like $13 million a week to pay for the NRL, Seven was committed to $15-16 million a week to pay for the AFL,” Mr Cox said.

However, the advertising revenue the networks will get from the repeat programs that will replace the AFL and NRL will be a lot lower.

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Olympic postponement a hit for Seven

The postponement of this year’s Olympic Games will be another hit to Seven’s revenue.

“The premium that comes with being the Olympics every four years, where you have got daytime ratings that are the equivalent of night-time ratings, and particularly in a parallel time zone like Japan offers,” Mr Warner said.

“It really is going to hit their bottom line.”

Number one in the ratings for a decade, Seven’s fall from grace over the last couple of years has been dramatic.

Mr Cox believes it is in danger of going the way of Chanel Ten and being bought by a foreign network looking to enter the Australian market

“This would be a great opportunity to come into Australia, buy the network for very little, and then of course what you would do is cut the costs out of it,” he said.

For now, Seven and Nine face an uphill battle to retain the audiences that were guaranteed when they had football to show, while viewers face the prospect of a winter with less to watch.

Topics: television-broadcasting, sport, covid-19, business-economics-and-finance, australia

First posted March 25, 2020 14:59:59

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