As reported by Frost Global, the Seven Network has secured a five-year extension with Tennis Australia to broadcast the Australian Open and AO Series events. While there were no financial details disclosed, reports suggest the new rights deal has a $30 million annual price tag, up from the current $21 million that Seven pays yearly to Tennis Australia.
Tennis Australia’s decision to award the rights without a competitive bidding process (Seven had an exclusive negotiation period as the incumbent rights holder) has drawn criticism from commercial rivals Nine and Ten. Earlier in the week, Ten’s new CEO Hamish McLennan told the Australian Financial Review that Tennis Australia would be “mad” not to put the rights to screen tennis to an open auction. Mr McLennan’s vision for Ten is to see it secure premium sport rights to draw viewers and advertisers back to the struggling network.
After the new deal with Seven was announced on Friday, Ten’s Director of Corporate and Public Communications Neil Shoebridge told Mumbrella:
“While we congratulate Tennis Australia on its new deal with Seven, we find it amazing and puzzling that Tennis Australia did not put its media rights out to tender – particularly as it had told other media companies it would do just that.”
The criticism seems to be that Tennis Australia has short-changed itself by not creating a competitive bidding process and therefore no extracting maximum value for its broadcast rights. The Australian Financial Review reported last week that Ten was prepared to lodge a $45 to $50 million bid for the rights, and Tennis Australia had already received a $40 million bid from an international sports group (who would then on-sell the rights to local broadcasters).
Tennis Australia executives had to consider if a competitive bidding process was the best way to sell its Australian broadcast rights? The answer was no.
Seven was always in the box seat for tennis rights, as its summer schedule is not congested with any other major sport during January, unlike Nine and Ten – therefore a competitive bidding process was unlikely to find the summer of tennis a new broadcast home.
WHY?
At the announcement of Cricket Australia’s new $590 million rights deal, Nine CEO David Gyngell commented that cricket was “Australia’s wallpaper over summer”. Nine has broadcast Australian cricket for the last 37 years. It is clear that Nine’s summer schedule and launchpad for the ratings year is built around the Australian cricket team. Nine’s new deal with Cricket Australia has further cemented it relationship and commitment to cricket as it includes a digital joint venture, where Nine will stream across all devices its cricket broadcasts. There is no room for tennis on Nine’s summer schedule.
That left Ten as Seven’s only real rival in securing rights to the summer’s tennis tournaments. The problem for Ten is that its summer broadcast schedule is already committed to other sports and it would have been unlikely to offer the same airtime to Tennis Australia that Seven has – Seven has committed to 330 hours of coverage per year, across two free-to-air channels and all mobile and tablet devices (including a number of other media rights). Over the 31 days of January that equates 10.6 hours per day of tennis coverage. Given tennis is Seven’s only major sports broadcast product in January, it has the scheduling capacity to meet Tennis Australia’s broadcast requirements.
The problem for Ten in wanting Tennis Australia to conduct a competitive bidding process is Ten has recently signed a $100 million five-year deal to be the exclusive broadcaster of the KFC Big Bash League. Ten has made a clear commitment Cricket Australia. The KFC Big Bash League is set to take place across January and February. Last season there were 35 matches player in the domestic competition, with each match lasting around three hours. Ten has said it will broadcast annually over 100 hours of BBL, and with the season set to be played during January and February, this clashes directly with Tennis Australia’s premier event, the Australian Open.
Further Mr McLennan said publicly that Ten:
“will work closely with Cricket Australia on the scheduling, marketing and promotion of the league to ensure it is the premium domestic sporting event of the Australian summer.”
It seems that Ten has prioritized the Big Bash as its tent pole sports broadcast product over summer, in the hope it will provide the ideal platform to market the network’s shows for the year ahead. Ten has desperately wanted a platform over summer to launch its shows, in the same way Seven has utilised its tennis coverage (think of the success of Lost, Desperate Housewives and My Kitchen Rules launching off the back of its tennis coverage) and Nine to a lesser extent with its cricket coverage. Ten now potentially has that platform with the Big Bash.
While Ten would have also liked the Australian Open as a tent pole product to launch its ratings year, it has already committed itself to cricket. It is unlikely Tennis Australia could afford to have tennis play second fiddle to cricket on the same commercial network. No top-tier sports organisation would want its broadcast product to compete for airtime with its direct competitor on the same commercial network. Seven was the clear choice for Tennis Australia.
The other major factor likely to have played a role in Tennis Australia’s decision is trust – the longstanding relationship between not only Tennis Australia and Seven, but Seven and tennis. Seven has broadcast the Australia Open since 1973. It has also broadcast Davis Cup ties involving Australia and Wimbledon in recent years. It not only picked up the rights to Wimbledon but delivered live, prime-time Wimbledon coverage on its multichannels (one acknowledges Nine could not do this because either multichannels did not exist or the anti-siphoning rules prevented them from doing so). Seven has had a long and fruitful relationship with tennis, much the same as Nine’s relationship with cricket. While Ten is the broadcaster of the Hopman Cup – the home of tennis in Australia is and remains Seven.
It is not surprising that Tennis Australia agreed to a deal with Seven without a competitive bidding process. Seven is the home of the summer of tennis in Australia and its rivals have committed themselves to cricket. Tennis Australia would not want a scheduling nightmare where cricket and tennis are battling for supremacy on the same commercial network. The safer bet to ensure the summer of tennis receives the widest possible coverage in Australia was to award the rights to Seven during its exclusive negotiating period, even if it has resulted in a possibly lower rights fees than what a competitive bidding process would have achieved. Sometimes it is more beneficial to maintain a relationship than go for top dollar.
Let us know your thoughts if Tennis Australia made the right decision.
References:
Ten bid to ace Seven on tennis rights, AFR
Ten labels Seven’s Tennis Australia deal ‘amazing and puzzling’, Mumbrella.
Channel Nine matches Channel Ten’s $500 million bid for cricket rights, news.com.au
Epic Australian Open battle smashes them, tvtonight.com.au
Seven pays up big to lock in tennis rights, AFR
The New Home of the Big Bash League. Network Ten and Cricket Australia Sign Five-Year Agreement, Ten Corporate