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Nine's future, and TV rights, on knife-edge

Date

Jon Pierik and Roy Masters

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.

12 comments so far

  • I just looked at the TV guide to see what I'd miss if Channel 9 went under, and realised that I don't ever watch any of their shows. It's hard being in business, and I don't wish losses on anyone, but I wonder why they'd let themselves become so irrelevant in Australia?

    What do I watch? ABC, SBS on free-to-air, and mainly internet TV (e.g. Nightly Business Report [www.nbr.com] and Bloomberg TV for news, and YouTube and Netflix for entertainment) where you can target specific items and watch when you want to watch.

    Could it be that Nine's demise (like print media) is an example of another loss to internet as the medium?

    Commenter
    Yours Truly
    Date and time
    October 16, 2012, 6:30AM
    • Further thought: For those who want to get around any blocks to US internet media (e.g. Netflix), and many other internet services, what you do is get a US IP address.

      Commenter
      Yours Truly
      Date and time
      October 16, 2012, 6:51AM
    • @Yours Truly. Wow, if you actually listened to what Bloomberg news and the ABC were telling you, you'd realise that the problem is not channel nine, but their debt laden owners. Also channel nine's audiences have actually grown, which really explodes your theory about the emergence of the internet.

      Maybe next time you should actually read the news, before dismissing the possible liquidation of channel nine's owners as the fruition of what you believe to be years of below-standard programming.

      You don't even watch channel nine, so why does it concern you? Are you an investor in CMC? If you are then you clearly need to switch your subscription from Bloomberg, they're clearly giving you some shoddy advice.

      all you are doing is taking pleasure at watching the demise of a network that you personally don't like, without regard to the welfare of the thousands employed by television networks around the country. I hope that you feel more intellectually superior as a result of your ill-informed comment.

      Commenter
      nics
      Location
      Canberra
      Date and time
      October 16, 2012, 11:28AM
  • As Ten has shown, no sport = no ratings. Holding popular shows back to suit a programming schedule = no ratings. These will be going through the heads of the bean counters who are owed soooo much money.As Alan Bond once said. If you owe a bank a million you have a problem. If you ow a bank a Billion they have a problem.

    Clear result will be bankers and financiers taking a stake & 9 bidding above the market price to keep Cricket.

    Commenter
    Gerryk
    Location
    Glen Waverley
    Date and time
    October 16, 2012, 6:45AM
    • Nine will have to do what 7 does on 7mate and show non stop ads with small breaks for programs - it getting unwatchable on 7's extra channels.

      Commenter
      Rocky
      Location
      Docklands
      Date and time
      October 16, 2012, 6:59AM
      • It sure would help them if they didn't keep changing program times and day, cutting them off in mid season or putting old episodes in the middle of a new series!!! That's why I stopped watching. I'd rather wait and buy the full season of the program I want to watch and then watch all of it at once rather than never knowing what I'm going to see.

        Commenter
        yellowfeebie
        Date and time
        October 16, 2012, 7:19AM
        • Seven "lost" the rights to the London Olympics due to the laziness and arrogance of certain parts of the Stokes team as well as the intelligence, knowledge and professionalism of a certain former Seven executive whom Stokes stupidly "let go" over a decade ago.

          Commenter
          ExNetwork
          Location
          Melbourne
          Date and time
          October 16, 2012, 7:19AM
          • Who cares if the very Sidneycentric goes to the wall..For decades when they were # 1 they were very arrogant and treated their viewers with distain so maybe a little bit od karma is at work.

            Commenter
            Proud Victorian
            Location
            Sandringham
            Date and time
            October 16, 2012, 7:59AM
            • Alas - the Nine Network centralised to Sydney way too much and undermined good old GTV9.
              The production line of boring talent from Sydney has been underwhelming. Many of the biggest stars had come through GTV 9 in the past.
              Ch.9 cast itself very poorly when it started giving Today show airtime about 10 years back to one Alan Jones - who, outside of Sydney is irrelevant to the rest of Australia.

              Commenter
              Michael C
              Location
              Melb
              Date and time
              October 16, 2012, 10:05AM
              • Contracts are voided for companies under administration so the NRL deal is far from secure.

                The NRL contract is a terrible deal - Nine pays two thirds of the cost and gets one third of the access. Foxtel did them over a barrel.

                Commenter
                john
                Date and time
                October 16, 2012, 12:01PM

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