AFL open to alternatives as McLachlan targets one last agreement

Talking points

  • The AFL sent out expressions of interest for its broadcast rights earlier this month.
  • Streaming services and television networks will bid aggressively.
  • The 2017 to 2022 deal was worth $2.5 billion over six years between Foxtel, Telstra and Seven.

The AFL sent out expressions of interest to potential bidders for its broadcast rights weeks before the resignation of long-standing chief executive Gillon McLachlan, in a clear sign of its ambitions to secure a lucrative new agreement before the end of the year.

Industry sources familiar with the correspondence, who spoke anonymously, said letters were sent to the major commercial television networks and streaming companies about two weeks ago. The request to submit interest in the rights came after the AFL was made aware there were other parties who wanted to seriously contend with longstanding partners Seven West Media and Foxtel for the ability to broadcast the code.

The AFL broadcast rights are expected to be highly competitive.Credit:Quinn Rooney

An AFL spokesperson said the governing body did not comment on broadcast talks or negotiations.

McLachlan announced plans to retire from his position as CEO after eight years last week, but said he wanted to secure a new deal before his departure. It will be the third agreement struck since McLachlan took the helm, including a renegotiation which took place during 2020 when games were suspended because of COVID-19. The last long-term deal was worth $2.5 billion over six years between Telstra, Foxtel and Seven.

News Corp’s Melbourne masthead The Herald Sun wrote last week the AFL planned to strike a deal with Foxtel (majority owned by News Corp) and Seven West Media in the coming months. It said talks had already started with both parties on a new deal that would run for at least three years and that Foxtel would want more exclusivity in non-Victorian markets.

However, requests for expression of interest show the AFL is looking at its alternatives and weighing up what the Australian media industry has to offer when the next round of rights begin in 2025.

Nine Entertainment Co, the owner of this masthead, is one of several broadcasters expected to take a look at the rights. But any decision will be complicated by the fact Nine is the broadcast partner of the NRL and is required to air multiple games on its main channel each week. However, securing the rights would give Nine the opportunity to accelerate growth of its sports streaming platform, Stan Sport, which currently broadcasts international tennis events and the rugby union.

Amazon Prime Video’s local content boss Tyler Bern said last month that the streaming service would look at any rights that came into the market. Amazon Prime Video was behind the documentary Making Their Mark and is currently a broadcast partner for Swimming Australia. The global company has deep pockets and has also signalled an intent to try and acquire the rights to broadcast the Olympic Games.

Unlike Foxtel, Amazon and other streaming services are not prevented by law to bid for AFL games at the same time as free-to-air networks. However, television networks are strongly advocating for these laws to be extended to streaming services such as Amazon.

Paramount, which owns Network Ten, has not only launched in this market, but bought equity in the A-League as part of a $200 million rights deal acquired last year. Globally, Paramount’s focus is sport and news. It is also expected to bid aggressively for the AFL rights.

Existing broadcast partners Foxtel and Seven West Media have undergone dramatic structural change since the last major deal. Foxtel, which currently has a debt pile of almost $2 billion, has cut back costs and reduced staff count as it tries to become a pure internet-led streaming company and aggregator. Until last week it was considering publicly floating on the ASX, but a combination of market volatility and risk associated with expiring content deals have deterred investors.

The challenge it faces is the amount of money required for sports rights deals is not offset by the average revenue per user (ARPU) on its sports streaming service, Kayo Sports, while the cable TV business is in steady decline.

Free-to-air partner Seven West Media, controlled by billionaire Kerry Stokes, has also spent the last few years cutting back costs to pay down its debt. It is one of the few media companies in market that could be part of industry consolidation in the next few years.

These factors, as well as the upcoming rights negotiations for highly expensive sports such as the cricket, tennis and Olympics, will need to be considered by the television networks and the AFL during the process. Multiple industry observers say there is a slim chance the games could be split across multiple commercial television networks and streaming services. Before 2011, the rights were shared between multiple free-to-air broadcasters.

Any deal struck would provide the code with significant financial security. The revenue generated from over $500 million of broadcast rights per season allows the league to broker new pay deals with AFL and AFLW players. The AFL wants to schedule Thursday night football for most rounds next season and the Commission is also considering whether to air its Grand Final later in the day. Both changes could add value to the broadcast rights deals.

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