Nine's future, and TV rights, on knife-edge
CHANNEL Nine's bid to remain a sports broadcasting power is likely to be shaped at a crucial meeting today when major stakeholders determine whether the broadcaster slips into receivership.
Nine Entertainment must get its lenders to agree on a capital restructure through a debt-for-equity swap otherwise the network will be forced to appoint administrators.
''It's a terribly simple trigger,'' Steve Allen, chief executive of media consultants Fusion Strategy, said yesterday. ''It's deadly serious and we are right at the precipice.''
This means Nine's long-form agreement with the Australian Rugby League Commission - it only recently won in a $1.025 billion deal with Fox Sports - and its ability to bid for a new broadcasting contract with Cricket Australia, which is banking on a major increase, could be under pressure.
But a senior Nine official told The Age last night he was confident whatever the outcome of the meeting, Nine would retain the NRL rights and renew its cricket contract, which expires in March.
While Nine's debt problems won't have an impact on its cricket coverage this summer, the key issue is whether it will have the cash and contra to remain a major player in current negotiations for a new contract, in which Seven Network bosses revealed to The Age in August they were seriously interested.
Cricket Australia said yesterday it was dealing exclusively with Nine at the moment. However, industry sources say if administrators are appointed, they could declare Nine does not have the budget to bid for the rights, or it could be handed a limited sports budget. Nine has first and last rights to the cricket, but if its budget is cut it may not be able to match a major offer from a rival.
Nine chief executive David Gyngell has an excellent relationship with CA, which helps its chances of retaining the rights, but there is speculation Gyngell could join Seven West Media if Nine goes into administration.
Nine paid $315 million for its current seven-year deal, but CA is hopeful of a major increase, particularly if a free-to-air network wins a slice of the Twenty20 Big Bash League. CA needs at least two serious bidders to drive up its overall value.
The Big Bash League is shown exclusively on Fox Sports, which is also renegotiating a new deal.
Fox appears unwilling to allow preliminary matches to be shown on free to air, but could be open to sharing a semi-final or the final, possibly on Channel Ten, which is desperate for live major sport.
''We are, of course, very interested in what is happening at Nine given the extraordinary chemistry that exists between our two organisations, as well as because of the important commercial relationship we have with each other,'' CA spokesman Peter Young said.
Nine has been praised for its coverage since Kerry Packer won the rights in 1979 after the World Series Cricket split, but Seven bosses have privately said this was the first time CA has ''really gone to the market''.
The contracts of most of Nine's commentators, including the venerable Richie Benaud, expire at the end of the summer.
Whether it's a new owner or an administrator controlling Nine, NRL clubs will still be paid their share of the code's new broadcasting rights deal and fans will still see the best games on Friday nights and Sunday afternoons. TV networks need content whether they are run by business barons or banks, and NRL is the best asset for a broadcaster in the winter months of New South Wales and Queensland.
Rugby league, including the annual state-of-origin series, is a guaranteed revenue raiser and, as one NRL club chief executive said, ''Nine can't do without us and can't let us go''.
However, the long-form agreement between Nine and the Australian Rugby League Commission has not been signed, raising questions of cash flow for both sides.
Nine agreed to immediately pay $90 million on signing. Just as Nine may not have the cash to activate the new 2013-17 deal, the commission needs the money to fund programs. But rather than cause the agreement to be voided, it's likely to be used as leverage by Nine to insist on further concessions, such as the timing of key matches, or more flexible scheduling.
Even if Nine relinquished rugby league, Seven and Ten would be serious bidders for the rights, although it is unlikely either network would pay $90 million up front.
Nine's other valuable sporting property is the summer and winter Olympics. Nine and Foxtel paid about $120 million to the International Olympic Committee for the rights to the 2010 winter Games and the London Games. Seven has indicated it is interested in regaining the rights.