Will Channel Nine lose its hold on Australian cricket?

For a third of a century, Australia’s Channel Nine has been, to use its long-running advertising slogan, Still The One for telecasting international cricket. This may be soon to come to an end.

Next March, following the end of the 2012-13 domestic Australian season, the current contract to televise Cricket Australia’s home fixtures in Australia will expire. The Nine Network, holders of those rights continuously since 1979, are currently in a battle to avoid entering administration.

Nine Entertainment, owned by private equity group CVC Asia Pacific and bought from Kerry Packer’s son James between 2006 and 2008, is carrying more than $3 billion of debt, much of which falls due next February. Restructuring talks with major debt-holders are currently way, but the prospect of the network, currently rated second for viewership among Australia’s commercial telecasters, into receivership are quite real.

None of this is likely to force Channel Nine off the air, and indeed each of Australia’s three commercial networks have been in the hands of the banks at least once over the past quarter of a century. But what sort of money will Nine’s next owners be willing to lay out to spend its way out trouble?

Nine Entertainment has already made one major purchase of sports telecasting rights in 2012. In August they renewed, together with pay-TV network Fox Sports, their rights to show National Rugby League (NRL) matches for the next five years at a record cost of $1.025 billion. While figures are not yet available, their coverage of the London Olympic Games is believed to have lost the network many millions of dollars.

The network’s big revenue earners currently are its reality TV properties, most notably Big Brother, The Voice and The Block. Nine’s last seven-year contract with Cricket Australia was worth about $300 million, and the asking price for the next seven can only be expected to be much higher.

But what is the benefit of cricket to Channel Nine these days? The days when the sport was Kerry Packer’s loss-making pet ended long before the billionaire himself died in 2005. Test matches are programmed to conclude by 6pm each day because Nine doesn’t trust them to generate TV ratings into prime-time hours. One-day cricket has lost its appeal and matches not involving Australia are routinely shunted off to less watched digital channels. Australia is set to play three Twenty20 internationals at home this summer, but Nine doesn’t have a bite of the domestic Big Bash League under the present contract.

The generation of couch-based fans who thrilled to the exploits of Lillee, Border and the Waugh twins has given way to those arguing with their Facebook friends over who should be voted out of the Big Brother house. At least that’s how the agencies see it.

If Channel Nine’s owners and/or administrators don’t consider the next round of cricket rights a good investment, Cricket Australia has two directions to turn – Channel Seven and Channel Ten. (There is no prospect that either government-owned network, the ABC or the ad-supported SBS, will bid for the rights.) Network Ten, the third-placed network of the three, currently has no major sports properties and targets a younger demographic than the others. Reports are that it would be interested in bringing the Big Bash to free-to-air television.

Seven, in first place on overall ratings, has success with its coverage of the AFL as well as the V8 Supercars circuit and the Melbourne Cup horse-racing carnival, and is believed to be interested in bringing all three formats of cricket into its portfolio. They have dabbled in late night telecasts of Ashes tours from England over the years, but haven’t shown Test cricket from home venues since Richie Benaud strutted his safari jackets before their cameras during the legendary West Indies 1975-76 tour.

Channel Nine recently won both large audiences and critical acclaim for its dramatisation of the World Series Cricket years. “Howzat: Kerry Packer’s War” may well be the only screen drama in which the central plot has been a media mogul’s relentless and successful pursuit of a sports broadcast rights contract. A sequel over the network’s loss of those rights over a massive pile of debt is unlikely.

Update: 25 October 2012: As a postscript to this column, Channel Nine has avoided administration. Most of the equity in Nine Entertainment has passed to US-based hedge funds in return for retirement of its debt.

While this improves their financial situation, there’s still no certainty that the new owners will renew with Cricket Australia. CA will be keen to extract top dollar, with pressure to pay their best players a competitive rate if they want them to skip the IPL.

Nine, as the incumbent free-to-air rights holder, does have an exclusive negotiating window with Cricket Australia before December 31. If this is not finalised by then, the other commercial networks Seven and Ten can submit bids – though Ten has recently announced significant losses and is downsizing its news division. Seven would be a serious contender if Nine does not seal a new contract this year

<em>(This column originally appeared on iSportconnect)</em>).

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