THE Nine Network is being urged by bankers to end its long-time cricket coverage due to estimated $30-40 million yearly losses, placing Cricket Australia (CA) under a financial cloud.
The broadcaster has a five-year deal worth $500 million with CA which expires next year and is negotiating a new contract for 2018-2023.
But financial analyst UBS believes Nine should consider walking away from negotiations if a better deal isn’t tabled.
“The existing cricket deal costs Nine circa $100 million per annum,” UBS media analyst Eric Choi wrote in note to clients. “We estimate the existing deal likely only generates gross revenues of $60-$70 million.
“We think it would seem logical for Nine to enter negotiations with the following mindset: i) more cricket content at no additional cost, or ii) to step away from the cricket contract.”
The former option could include Network Ten relinquishing rights to the Big Bash League (BBL) for CA to include the popular domestic T20 competition under the new deal.
In terms of its international cricket product, CA is confident it’ll find a buyer.
“We are not concerned that there will be a lack of interest for our media rights,” the body’s broadcasting manager Ben Amarfio told Fairfax Media. “Live sport, and cricket in particular, continues to be a premium asset.”
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The revelation Nine needs to consider axing its cricket coverage is at odds with plans the network revealed last year.
Channel Ten secured the new TV rights deal to the BBL in 2013 when it agreed to pay $20 million a year, but The Australian reported Channel Nine’s interest in making a play when the current deal expires in 2018.
“Any future deal that we do, we want everything,” Nine’s director of sport Tom Malone said in November. “We want Test matches, we want one-dayers, we want (international) Twenty20s and we want the Big Bash.”
The BBL’s success means the rights will now be valued at a much higher price than what Channel Ten initially paid. This week the Courier Mail reported Cricket Australia was hoping to receive approximately $250 million for the rights over a five-year period — an offer Ten will struggle to make given its difficult financial position after a year of poor ratings.
While that would normally pave the way for Nine to make a play at the broadcast rights, that seems unlikely after the network was encouraged to release its stranglehold on cricket.
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Originally Posted by TS50
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