Television bosses need to lift their game if they are to remain in the game
The Age
Wednesday March 23, 2011
As prices drop, the internet threatens to become sports fans' preferred provider. THE deal that the AFL and NRL bosses strike over the next couple of weeks on broadcasting rights of their respective codes will carbon date them. The focus of attention has been firmly on the amount they will capture from pay television provider, Foxtel and the free-to-air networks.That is a very 2011 perspective or a 2006 retrospective.Sure, free-to-air television is the means by which most of us view sports programs and 25 per cent of us access sport via pay TV.But the world is moving on. Only this week, Google has announced it is negotiating with the National Basketball Association in the US, other sporting codes and filmmakers and even celebrities to buy content directly.It is a sign of the times. Internet providers are becoming first line program suppliers. They are cutting out the middle man and offering consumers the opportunity to access the programs they want for a (smaller) fee.Sure, Australia is behind the US, but not by a huge amount. And the gap is quickly closing.Even today there are numerous ways that the Australian consumer can watch whatever television or first-release movie they want.For the early adopters there is Apple TV, TBox and a myriad of other ways to watch a list of desired programs. All one needs to do is pay.Around the world, the new wave of content providers is evident. Here some will offer a menu via the internet and others via the copper or fibre network.This phenomena is still in its infancy, but in five years or less it won't be. When the broadcast rights come up for renegotiation next time, the media landscape will be very different.Thus bundled pay television services are now under threat be it in the US or in Australia.In Australia, the growth in alternative sources of content delivery is going to be further enabled once the national broadband network is built and provides us with almost unlimited bandwidth.But back to the sporting rights.This is the real bastion for pay television and exactly why the NRL and AFL codes will demand a big price from pay television providers. The footy blokes have plenty of cards and should drive a hard bargain.Without sport, pay television will find it hard to differentiate its service. Most of the reruns of US network television are now readily available on the 16 free-to-air stations.Among Organisation for Economic Co-operation and Development countries, our pay TV is the second-most expensive and is already finding subscription rates have peaked. If consumers migrate to internet-based devices to watch just the sport they want, it will be cheaper than having to fork out for pay TV.But little has been said about the price that sport internet rights might fetch. Maybe $50 to $70 million over five years. That might look reasonable today, but in five years it is my bet that this will look like a bargain.The only issue holding back internet suppliers of programming in Australia is the lack of bandwidth so the current signal will not be as reliable. The NBN will change all this. Telstra is an the sticky position of having a horse in each race. As the 50 per cent shareholder in Foxtel and a supplier of internet television it will be competing against itself.Oddly enough, the free-to-air networks are not under the same degree of pressure as pay TV. The new digital channels have enhanced their audience reach and are taking some of the audience away from pay television.In a more immediate sense, the AFL broadcasting rights are being worked on this week. In prior years, Seven has been the lead bidder for free-to-air rights alongside Ten.But now the two networks are engaged in a legal dispute over chief executive poaching leaving one to wonder whether these differences can be put aside in the interests of pitching a united AFL bid.
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