The NRL TV Rights: The Breakdown

THE CONTENDERS

Nine
The current free-to-air rights holder and holder of rugby league rights since 1992. Generally regarded to pay significant unders for the code. Kerry Packer, the former owner of Nine, was a big league man and a big player in the Super League war and used his influence to ensure Nine kept the rights at well below market price. Packer is no longer about with Nine now owned by CVC Asia Pacific, a private equity firm with no emotional investment in rugby league. Nine owns stations along the eastern seaboard but Adelaide and Perth are affiliates and out of direct control. The station is currently saddled with $2.7 billion in debt. Is desperate to retain sole free-to-air rights and may look to boost the number of games covered a week to four. Currently shows three per week and only one live, along with State of Origin and other representative fixtures (which it did not show live this season), but will not pay overs out of some loyalty to the code. Have first and last rights. Also have a relatively tight agreement with Fox Sports to launch a joint bid if first bids are rejected, which they will be. Nine boss David Gyngell is confident, bordering on arrogant, adamant Nine won't lose the rights. "We've got such a strong belief in the product," Gyngell said. "We're fighting to the death for rugby league rights … Nine will not be losing the rights." Has not been seriously challenged for the rights in the past and has effectively abused that stagnation.

Fox Sports
Has held the rugby league pay television rights since the Super League War, a war started solely so Rupert Murdoch could sell pay television subscriptions via rugby league. Currently broadcasts five games a week live and shows all eight. Offers NRL on Fox with Fox Sports 2 heavily focussed on rugby league: live matches, panel shows, replays, the broadcasting of old matches, under-20 matches (which regularly outrate A-League soccer and Super 15 rugby). Rugby league regularly has 70-80 of the highest 100 rated pay television programs. Has long paid unders for the game as News Limited, which owns half of Fox Sports (with Consolidated Media Holdings), owned half of the NRL, essentially allowing it to negotiate against itself for the league rights (this will be the first time that won't happen). Fox Sports essentially exists because of rugby league and given how intertwined the station is with the game it is hard to imagine them losing the rights. Aside from paying unders, has generally treated the game well in terms of coverage and promotion. Has formed an alliance with Nine.

Seven
Owner of the AFL rights. Last held the rugby league rights in the late 1980s. Owns all five capital city stations. Chief executive David Leckie is a big rugby league man. Since 2007 it has been the top-rated network in Australia. Is the strongest financially of all networks, recording a profit of $115.1 million in 2010-11 with a dividend paid and share prices up. Has long recognised the halo effect of having a major football code. The station has little rugby league-specific programming though it did flirt with Matthew Johns, giving him his own football/variety show. May look to form a partnership with Ten as it did for the AFL rights from 2007-11. A win for Seven could assure it top spot in the ratings war for the next five years.

Ten
Often third in the ratings of the three free-to-air stations, Ten currently has rights to no major sports with motor sport, the NBL and netball their biggest games. Looking to get a piece of the NRL action after missing out on the AFL. Last held the rights in 1991 but then had to give them up when suffering financial difficulties. Lachlan Murdoch and James Packer – both big rugby league men – now control the company. Looked primed to make a big play when its multi-channel One HD was under a sports format but it has now moved to a "man's man" format. Still, a source told The Daily Telegraph in February that "we want it all". Has shown some commitment to the game by keeping The Game Plan alive over the last two seasons. Has a number of rugby league identities contracted including a natural top caller in Andrew Moore. Will consider a joint bid with Seven.

Telstra
Will be in the market for the digital rights. The ruling in the Optus case has helped the cause of Telstra and the NRL. Will look to come up with a bid similar to that put forward to the AFL where they can show games in full on mobile devices as well as immediate highlights.

THE ISSUES

Money
The NRL received $500 million from Nine and Fox Sports (and Sky Sport New Zealand) over six years from 2007-12 when the last television rights were negotiated. Estimated figures for the new television deal range from $900 million to $1.4 billion. Latest estimates suggest about $1 billion though News Limited print media is (unsurprisingly) talking down the value of the rights, suggesting the NRL won't get to $1 billion. With so many clubs and the game as a whole tied so closely to this television deal, money will be the prime issue with anything less than $1 billion set to be considered an epic failure.

First and Last Rights
Nine and Fox Sports have first and last rights. This gave Nine and Fox Sports a three-month exclusive negotiating period. This period has ended with negotiations still open after Nine and Fox Sports lodged individual bids, both of which were believed to be well below what the NRL expects. Seven and Ten have now entered the bidding. Nine and Fox Sports have the right to match any final offer from Seven and Ten if it is within 20 per cent of Nine's and Fox Sports' final offer. This essentially means Seven and/or Ten have to blow Nine and/or Fox Sports out of the water with a huge offer.

Coverage, Accessibility and Promotion
Nine has been abhorrent in this regard and the administration of David Gallop is nearly as culpable. Nine steadfastly refused to show games south of the Barassi Line before midnight despite a contractual obligation to do so (which the NRL refused to enforce). The network did not have the capability to show the game at a reasonable hour in Adelaide or Perth (Nine does not own the stations in those cities) with State of Origin matches seen by viewers in the United States before they were in South Australia or Western Australia but the station belligerently refused to show the game into Melbourne, even with the advent of multi-channelling. Dead-rubber State of Origin matches were shown on delay and Grand Final coverage was chopped to the match only. Only this year, in an act of true desperation, did Nine start showing games at a reasonable hour into Melbourne on one of its multi-channels. Other rugby league related programming was not shown at all. Seven owns all its capital city stations and has a long record with its AFL coverage of promoting games outside of its traditional heartland. Ten has One HD with which it would willingly provide nationwide coverage. Fox Sports shows its rugby league games nationwide. Fans across Australia must be able to get access to NRL matches while it is imperative for the growth of the game that new fans can be won by allowing people to actually get to see and understand the code. There is speculation that the NRL could receive its own channel as the AFL has Fox Footy. For branding purposes, this is a must and is a huge plus for the Fox Sports bid.

Live Matches
There are currently only six of eight matches shown live on television with the second Friday night game on Nine and the Sunday afternoon game on Nine shown on delay. Delayed coverage is no longer acceptable. The NRL will look to ensure the free-to-air rights holder shows all games live. This issue becomes doubly important as the prospect of Fox Sports showing every game live (as it does the AFL) is a distinct possibility. Nine will no longer be able to hold rugby league fans to ransom again with their scheduling.

New Zealand
The game is just flying in New Zealand at present with the Warriors extremely hot, the international team going well and the game becoming a pathway for plenty of young stars. Ratings are up on Sky Sports and the growth potential in NZ is big. While a second team in New Zealand is unlikely, the NRL will be looking to get plenty out of selling off the New Zealand ratings and using the game's growing popularity in New Zealand to reap trans-Tasman advertising rewards.

Geography
Rugby league has been extremely good for pay television with Foxtel subscriptions significantly higher in NSW and Queensland than the rest of Australia. If Fox Sports was to lose the rights, they could expect a significant hit with a good portion of those expected to give up pay television. This should see Fox Sports not pay unders. The regional dominance of the NRL will also play an impact on the value of the free-to-air rights with the sixth to 10^th biggest markets in Australia all rugby league markets.

Ratings
Ratings for the NRL are high. All three Origins rate in the top 10 programs in a year. Between 70-80 NRL matches rate in the top 100 pay television shows. Ratings have been consistently rising over recent years. League had a cumulative viewing audience of 120 million in 2011, the most of any sport. All this with little help from its free-to-air provider. These numbers have the NRL confident it can achieve a $1 billion payday.

Advertising Impact
There will be changes to the way the game is played in order to maximise advertising revenue opportunities for the rights holders and thus bring in more money for the game. This will primarily involve the standardisation of breaks – a long overdue move for so many reasons – meaning ads can be taken during drop-outs, scrums, breaks in play etc. There may also be an extension of halftime and/or the dividing of the game up into quarters. This is being pushed by the NRL but would be welcomed by free-to-air broadcasters, who may accept this as a compromise for showing all games live. Fans won't be happy but this will assure the long-term viability of the game.

Exclusivity
The free-to-air provider will be very keen to get exclusivity for their matches but may be prepared to lower their costs by sharing matches with Fox Sports as is the case with the AFL now. For free-to-air stations in trouble financially (Nine and to a lesser extent Ten), this presents as a reasonable compromise, while Seven has already shown a willingness to enter into this kind of deal. It would actually be a surprise if Fox Sports didn't emerge from this being able to show all eight games live. This helps the NRL push into new territories as well as keeping betting shops happy (and creating a greater financial contribution to the game) by increasing live betting turnover.

The Halo Effect
There is a school of thought that owning the property of a major football code has a "halo effect", boosting audience numbers for other franchises and shows on the network. Roy Masters referred to Fox and its purchase of the NFL in a recent article on the NRL rights. Seven believes in this with the AFL. Seven also believes that if it can win the NRL rights it can inflict a devastating blow on Nine who, even though disliked broadly by rugby league fans, benefits from cross-promotion and internal advertising during NRL broadcasts.

Multi-channelling
The advent of multi-channelling provides a level of flexibility that could see a station invest in the two major football codes in Australia, provide full and live coverage to both codes, beaming on their primary channel in the heartland states and on a multi-channel in the non-traditional states. This benefits Seven the most, allowing them to broadcast the NRL into NSW and Queensland on Seven and into the rest of Australia on 7Mate. Nine has started showing games into Victoria on Gem. This flexibility will see Seven become a legitimate player in negotiations. There is a slight chance that Seven takes all the games and then on-sells some to Fox Sports.

Fixed Schedule
The NRL is rightly looking to move to a fixed schedule. This will be good for the game. No longer will television networks be able to dictate the draw but it will come at a cost as networks won't pay as much without a say in matches. The NRL must bite the bullet on this one.

The Anti-Siphoning List
This will ensure at least three matches are kept on free-to-air television and gives free-to-air networks some leverage in negotiations. The NRL will always want and have a free-to-air presence though. They won't be as short-sighted as rugby union on that front.

Other League Programming
There are very few league programs on television and even fewer of quality. Nine runs with The Footy Show and The Sunday Footy Show, which incorporates The Sunday Roast. Nine's other programming has been poor and has done little for the game. The Footy Show is what it is but the station has not attempted to put on a serious prime time or evening show and worse, have dumped quality shows like Boots and All and allowed The Sunday Roast to be absorbed. There is also a general staleness around the station's football coverage with the same faces filling the major slots since the early 1990s. Coverage often takes a joking manner that diminishes the standing of the game. Little effort is put into building up the code, an individual game or the standing of the sport while analysis is often bland and without insight. Fox Sports has NRL on Fox and shows numerous replays, both old and new, but really should be looking at a number of other programs. A dedicated NRL channel will see this. Commentary, particularly from Warren Smith, is very good. Ten has The Game Plan, which is excellent.  It is fresh, interesting and serious. It is a great effort for a station without any interests in the code. The NRL needs to show some leadership on this and ensure league is covered around the clock with quality commentary. The NRL is so far behind the AFL on this it is a no-contest.

THE TIMESLOTS

Friday Night
Two games currently shown on Nine, one live into NSW and one live into Queensland with the games flipped on delay following the first. Friday Night Football is the highest rating game on free-to-air and will continue to be the marquee match-up. The second game may stay but it is more likely to move to a Saturday afternoon or a Sunday evening.

Saturday Afternoon
There has been no Saturday afternoon game since the mid-1990s but there is very likely going to be in the next television deal with the free-to-air provider set to show the game live leading into the 6pm news. Could be added to Fox Sports' 'Super Saturday' line-up.

Saturday Night
Fox Sports currently shows a live game at 5.30 and two games live at 7.30 (via the viewer's choice option), showing a replay of the other at 9.30. Ratings have been very good for Saturday night, up in 2012, and Fox Sports will desperately want to maintain its hold on Saturday night's but a live game on free-to-air on Saturday evenings would not surprise. A potential Saturday afternoon game could see times for the later games moved to 6pm and 8pm respectively.

Sunday Afternoon
At present, Fox Sports opens with a live Toyota Cup game followed by a live NRL match at 2pm with Nine then showing the 3pm game at 4pm. A live 4pm game is expected in the new deal as the NRL moves towards eight live matches. Pay television and free-to-air networks

Sunday Night
Has been trialled a number of times this season to great success and is a perfect time slot for pay television. If it does go ahead, it will be on Fox Sports. Looks increasingly likely to be used from 2013 onwards.

Monday Night
With no competition from the AFL, the Monday night game has become extremely popular and despite some very ordinary match-ups in 2012. Free-to-air stations, particularly Ten, are keen to get the slot but Fox Sports have made a very good go of it to date. Monday night is locked in as a timeslot for the foreseeable future. Free-to-air coverage on Monday is an important in for growing the game south of the Barassi Line.

State of Origin
The most highly sought-after franchise. The three Origin matches traditionally rate in the 10 highest rated shows in a year. Shown live to New South Wales and Brisbane and sometimes Melbourne, the NRL will require this to be shown live across Australia. Origin provides much of the value for the television rights.

Internationals
Nine currently has the right to internationals but chose not to cover this year's Anzac Test (or City-Country) live. When games are shown in England, Nine does not send its own commentary team. Nine has very little commitment to the international game and this will have been recognised by the NRL. Even though delayed by nearly two hours, the Anzac Test rated exceptionally well.

THE SCENARIOS

What Should Happen
The NRL should get a deal in excess of $1 billion, closer to $1.25 billion, while leaving Nine out in the cold. A combination of Seven and Ten would win the free-to-air rights with games from a fixed schedule sold off separately with the assurance that breaks in play would be standardised. Seven would take the marquee Friday night game, the Sunday afternoon game (shown live from 4pm) and all representative fixtures including State of Origin. Ten would get Saturday afternoon and Monday night. Fox Sports gets two Saturday night games, one Sunday afternoon game and one Sunday evening match. Fox Sports would also simulcast the remaining four games. The NRL will insist and enforce national free-to-air coverage of the four matches awarded to commercial television. This could work because the main parties – Lachlan Murdoch and Kerry Stokes have cross interests. Murdoch owns part of Ten and News, which part owns Fox Sports, while Stokes is the majority owner of Seven and has a share in Fox Sports. Seven and Ten also have a vested interest in knocking Nine out of the game. The NRL should not extend pay television first and last rights and eliminate free-to-air first and last rights. With this model, coverage would become fresh, fans would get eight live matches and national coverage and the fixed schedule takes away the power to dictate the draw from television networks.

What Will Happen
There are a number of likely contenders but the likelihood is that it will again be Fox Sports and Nine with Ten perhaps winning Monday night rights and Fox Sports having the right to simulcast all eight games. It will be a travesty if Nine is allowed back inside the tent but the network's whole image is wrapped up in rugby league and even though the station is riddled with debt, allowing Seven to pinch the rights would cripple Nine and leave it wallowing in mediocrity for five years. Nine will likely keep Friday night and Sunday afternoon but will be forced to show Sunday afternoon live. They will fight with Ten for Saturday afternoon, with Ten favoured to win Monday nights. Nine would again likely hold Origin rights though Seven is a very real chance of pinching the representative calendar. There will be a fixed schedule and games will be extended by the standardisation of breaks. Fox Sports will maintain 'Super Saturday' and a Sunday game and will benefit from the ability to simulcast all matches. The NRL will break $1 billion.