Tuesdata: Have sports rights become too expensive for the networks to afford?
Welcome to Tuesdata, our weekly analysis for Unmade’s paying members.
Below, we weigh up the astronomical cost of sports rights for TV companies.
Further down, the Unmade Index continues its recovery.
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When will the sports rights bubble burst?
Seja Al Zaidi and Tim Burrowes write:
Yesterday’s news of Nine locking in the next two overseas Ashes series was the latest signal that the TV networks are willing to stretch themselves to secure rights to live sport.
According to the Australian Financial Review, Nine will pay $40m for the two series taking place in England in 2027 and 2031 - about 50% more than the $13m per series it was reported to have paid for the 2019 and 2023 series.
The news come at the same time that ASIC filings revealed that Foxtel’s annual content costs had jumped from $1.4bn to $1.5bn in the last financial year - and that’s before the organisation’s bigger new deals for AFL and cricket kick in after this financial year.
The major players in marquee sports rights in Australia are Seven (including AFL and cricket); Nine (NRL, Olympics and tennis) and Foxtel (AFL, NRL, Formula 1 and cricket).
At the next tier sits Optus, which has the rights to English Premier League soccer games and Ten’s owner Paramount which holds the A League, the Australian F1 grand prix and (until today) the Melbourne Cup. SBS last week announced it has won the rights to screen the 2026 men’s FIFA World Cup.
Two key factors are driving the continuing escalation of sports rights costs. As free to air TV audiences decline, live sport and news are the last remaining reliable genres to guarantee viewing numbers. And the multiplication of paid streaming services adds new complexity.
Thanks to anti-siphoning laws, Foxtel can only get in on many sports rights deals through partnering with a free to air network which asks them pay a premium to do so.
The long term nature of the deals - many of them now stretch into the next decade - means that network bosses have been forced to lock in financial commitments that stretch beyond the point when the future shape of the broadcast industry is predictable. A further unknown is the impact of likely legislation restricting sports betting ads which will inevitably hit advertising revenue, which is already in decline.
The depressed ASX valuation of the two locally listed companies - Nine and Seven - suggests that the investment community suspects they may be stretching themselves too thin.
The networks have taken the risk knowing that failing to secure prime sports and losing audience is also commercially dangerous. Ten’s audiences have never recovered from then boss Lachlan Murdoch’s surrender of its AFL rights in the forlorn hope of winning NRL a decade ago.
Having the rights to a particular sport is an asset that translates to greater certainty for advertisers compared to a newly commissioned show that has no guaranteed audience.
So how much is each of the big three - Seven, Nine (plus streaming service Stan) and Foxtel (plus Kayo) - on the hook annually? Below, we offer an estimate.